Companies Act 2013 Ready Referencer 13 Aug 2014

Companies Act, 2013
A Ready Referencer
(Revised Edition)
THE COMPANIES ACT, 2013
READY REFERENCER
BACKGROUNDER
First Print July 2014
Reprint August 2014
Revised Edition August 2014
PRICE : Rs. 100/- (Excluding Postage)
THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

All rights reserved. No part of this publication may be translated or copied
in any form or by any means without the prior written permission of The
Institute of Company Secretaries of India.
Published by :
THE INSTITUTE OF COMPANY SECRETARIES OF INDIA
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(ii)
FOREWORD
The 8th of August, 2013 would be remembered as a historic day in the

history of India Inc. On this very day the Rajya Sabha passed the new
company law which was in incubation for over two decades. The much
awaited notification bringing into force the provisions in 183 sections of
the Companies Act, 2013 with effect from 1st April, 2014 was issued on
26th March, 2014. Earlier, 98 sections were notified on 12th September,
2013 and section 135 relating to Corporate Social Responsibility and Schedule
VII (Amended) were notified on February 27, 2014. Of the 470 sections in
the Companies Act, 2013, substantial number of sections and most of the
Rules thereunder have been notified.
The new law is a paradigm shift in the way every stakeholder in a corporation
needs to redirect his thought process. Moving beyond corporate governance,
the new law would ensure corporate democracy thereby catapulting
company secretaries from their present role to that of key managerial
personnel as the term used for referring to company secretaries under the
new law carries with it various connotations, making him responsible for
implementation of all relevant laws applicable to companies. It envisages a
much larger role for them in the areas of secretarial audit, restructuring,
liquidation, valuation and much more.
The Institute as part of its capacity building initiatives under the Companies
Act, 2013 thought it fit to bring out this Ready Referencer on Companies
Act, 2013, as a self learning aid to understand the basic tenets of the new
Act. The Ready Referencer introduces readers to the new concepts in the
Companies Act, 2013 and lists out the salient features, of the law in a
capsule form.
I am grateful to CS K Sethuraman, Group Company Secretary, Reliance

Industries Ltd. and CS Shashikala Rao, PCS for preparing the initial draft of
this book, which bears testimony to their knowledge and scholarship. I
commend the dedicated efforts put in by Shri Saurabh Jain, Deputy Director
in the Institute for seeing the work through the press.
I sincerely believe that the readers would find the contents of this referencer
useful and look forward to the constructive views and suggestions for further
improving the contents of this publication in future editions.
New Delhi CS R. Sridharan

August 14, 2014 President, ICSI
(iii)
PREFACE
PREFA
During pre-independence era, the Companies Act, 1913 regulated various
corporate actions of joint stock companies. Post-independence of India,
the Companies Act, 1956 which contained 658 sections and 15 schedules
regulated the entire gamut of activities with regard to companies, namely
formation, management and administration, governance, re-structuring,
fund raising and processes thereof, compliance, rights, duties and obligations
of various stakeholders, liquidation and winding up.
The Companies Act, 2013 (The Act) is a historic legislation which has
replaced existing Company Law which is 56 years old. It is a modern and
contemporary law enacted after several rounds of deliberations with various
stakeholders. It moves from the regime of control to that of liberalization/
self-regulation.The Act contains 470 sections under 29 chapters with seven
schedules. The Act enables the Central Government (Ministry of Corporate
Affairs) to make rules through subordinate legislation.
The various important provisions of the new Act and the Rules framed
thereunder have been set out in brief in the following pages to give a
birds eye view. Provisions contained in the rules to the Act have been
incorporated at appropriate places. This executive summary sets out the
provisions of law as they are in the Act and the rules without any comments
or critical view.
Another major shift in the new Act is that the exemptions from applicability
of various provisions available to a private limited company under the
Companies Act, 1956, substantially stand withdrawn under the new Act.
It is hoped that the Central Government issues requisite notification /
clarification from time to time exempting private companies from the
compliance requirements provided in the Act. All the provisions
summarized in the following pages are applicable to a private company
also unless specifically stated otherwise.
The initial draft of this executive summary was prepared by
CS Ms. Shashikala Rao, Practising Company Secretary, when we co-
authored a book titled Treatise on the Companies Bill, 2011. I
acknowledge her contribution. I thank my colleagues CS Shri Ratnesh
Rukhariyar, CS Ms. Geeta Fulwadaya and Shri K. Shankara Raman for their
assistance.
I believe this executive summary will be a useful reference. I request the
readers to offer their feedback and suggestions to k.sethuraman@ril.com.
K. Sethuraman
Mumbai
August 12, 2014
(v)
INDEX
Preface
I Preliminary Definitions 1
Associate Company 1
Control 2
Dormant Company 2
Financial Statement 2
Financial year 2
Free reserves 2
Key Managerial Personnel 3
Listed Company 3
One person Company 3
Private Company 4
Related Party 4
Relatives 4
Small Company 5
Subsidiary Company 5
II Incorporation of Company and Matters
Incidental thereto 7
Memorandum and Articles of Association 7
Incorporation of Companies 7
Commencement of Business 8
Change of name of Company 8
Alteration of Memorandum and Articles 8
Service of Documents 9
III Prospectus and Allotment of Securities 10
Modes of Raising Resources by Companies 10
Prospectus 10
Variation in terms of Contract or Objects
in Prospectus 10
Offer for sale of Securities 11
Penal Provisions 11
Private Placement 12
Powers of SEBI 13
(vii)
IV Share Capital and Debentures 14
Kinds of Capital 14
Duplicate Certificate of Shares 14
Variation of Shareholders Rights 14
Issue of Shares at a Premium / Discount 14
Preference Shares 14
Transfer and Transmission of Securities 15
Alteration of Share Capital 15
Further Issue of Capital 15
Employees Stock Option 16
Issue of Bonus Shares 16
Reduction of Share Capital 17
Debentures 17
V Acceptance of Deposits by Companies 18
Acceptance of Deposits from Members 18
Limit for Acceptance of Deposits from Members 18
Acceptance of Deposits from Public 19
Limit for Acceptance of Deposits from Public 19
Major conditions for Acceptance of Deposits 19
Which are not Exempt Deposits 19
Deposits accepted before the commencement
of the Act 20
VI Registration of Charges 21
VII Management and Administration 22
Register of Members etc. 22
Annual Return 22
Signing of Annual Return 23
Certification of Annual Return 23
Return for change in Promoters Stake 23
Annual General Meeting 23
Notice of General Meeting 23
Quorum for Meetings 24
Adjournment of Meetings 24
Chairman of the Meetings 24
Proxies 24
(viii)
Voting through Electronics Means (e-Voting) 24
Demand for Poll 25
Postal Ballot 25
Use of Electronic Means 26
Resolution requiring Special Notice 26
Resolution and Agreements to be filed 26
Minutes of General Meeting / Board Meeting 26
Report on Annual General Meeting 26
VIII Declaration and Payment of Dividend 27
IX Accounts of Companies 29
Books of Account etc. to be kept by Company 29
Financial Statement 29
Depreciation 30
Reopening of Accounts on Courts or
Tribunals Orders 30
Voluntary Revision of Financial Statement or
Boards Report 30
National Financial Reporting Authority (NFRA) 31
Accounting Standards 31
Boards Report 31
Directors Responsibility Statement 33
Corporate Social Responsibility 34
Internal Audit 34
X Audit and Auditors 35
Appointment of Auditors Financial Audit 35
Resignation / Removal of Auditors 36
Auditors Report 36
Reporting of Frauds by Auditors 36
Auditors not to render certain Services 37
Cost Audit 37
XI Appointment and Qualifications of Director 38
Board of Directors 38
Independent Directors 39
Appointment of Director by Small Shareholders 40
Additional / Alternate Director 40
(ix)
Number of Directorships 40
Duties of Directors 41
Resignation of Director 41
Removal of Director 42
Registers to be kept open at
Annual General Meeting 42
XII Meetings of Board and its Powers 43
Meetings of Board 43
Quorum for Meetings of Board 43
Resolution by circulation 43
Audit Committee 44
Vigil Mechanism 44
Nomination and Remuneration Committee 45
Stakeholders Relationship Committee 45
Powers of the Board 45
Restrictions on Powers of Board 46
Loans to Directors etc. 47
Loans and Investment by Company 47
Investment of Company to be hold on
its own name 48
Related Party Transactions 48
Contract of Employment with Managing
and Whole-time Directors 50
Restriction on non-cash Transactions
involving Directors 50
Prohibition of Forward Dealings 50
Prohibition of Insider Trading of Securities 50
XIII Appointment and Remuneration of
Managerial Personnel 51
Appointment of Managing Director, Whole-time
Director or Manager 51
Managerial Remuneration 51
Appointment of Key Managerial Personnel 52
Secretarial Audit 53
Functions of the Company Secretary 53
(x)
XIV Inspection, Inquiry and Investigation 55
Inspection 55
Search and Seizure 55
Investigation 55
Serious fraud investigation office (SFIO) 55
Protection of employees during investigation 55
Freezing of assets of the company on inquiry and
investigation 56
General 56
XV Compromises, Arrangements and Amalgamation 57
Compromise or arrangements with Members
and Creditors 57
Merger and Amalgamation of Companies 58
Merger and Amalgamation of Certain Companies 58
Merger and Amalgamation of Company with a
Foreign Company 59
Purchase of Minority Shareholding 59
Liability of Officers and Offences Committed
prior to Merger 59
XVI Prevention of Oppression and Mismanagement 60
Class action 60
Who can file class action suits 60
XVII Registered Valuers 63
XVIII Removal of Names of Companies from the
Registrar of Companies 64
Power of Registrar to remove the names
of the company 64
Restrictions for removal of name 64
Fraudulent application for removal of name 65
XIX Revival and Rehabilitation of Sick Companies 66
Determination of Sickness 66
Application for revival and rehabilitation 66
Appointment of interim administrator 66
Order of tribunal 67
Sanction of the revival and rehabilitation scheme 67
Implementation of scheme 67
Rehabilitation and insolvency fund 67
(xi)
XXVIII Special Courts 69
Establishment of special court 69
Transitional provision 69
Compounding of offences 69
Mediation and conciliation panel 70
XXIX Miscellaneous 71
Punishment for Fraud 71
Punishment for False Statement 71
Punishment for False Evidence 72
Punishment in Case of Repeated Default 72
Adjudication of penalties 72
Annexures
Annexure I - Statutory Registers to be maintained under the
Companies Act, 2013 73
Annexure II - Matters requiring Members approval through
Ordinary Resolution 75
Annexure III - Matters requiring Members approval through
Special Resolution 78
Annexure IV - Matters requiring Members approval through
Postal Ballot 83
Annexure V - List of items required to be placed on
Companys Website under the Companies
Act, 2013 and Listing Agreement 85
Annexure VI - List of Laws for Compliance 87
Annexure VII - Specimen Format of Compliance Certificate 93
Annexure VIIII - Committees 94
Annexure IX - Chapter-wise Highlights with List of
E-forms and Physical Forms prescribed by
Rules made Thereunder 98
Annexure X - New Forms 121
Annexure XI - Title of Forms 124
Annexure XII - Forms being Converted into E-forms 125
Annexure XIII - List of Compoundable Offence under the
Companies Act, 2013 126
Annexure XIV - Penalties 135
(xii)
Chapter I
PRELIMINARY
The Companies Act, 2013 introduces some new concepts such as:
(1) One Person Company (OPC)
(2) Small Company
(3) Dormant Company
(4) Inactive Company.
Some changes have been made in the definition of private company
and subsidiary company.
Some new expressions (important) have been defined and the meaning
of certain expressions enlarged / modified, namely:
(a) associate company,
(b) control,
(c) court to include special courts established under the Act,
(d) employee stock option,
(e) financial statements,
(f) financial year,
(g) free reserves,
(h) independent director,
(i) key managerial personnel,
(j) promoter,
(k) related party,
(l) serious fraud investigation office.
Associate Company [Section 2(6)]
Associate company in relation to another company means a company
in which another company has a significant influence, that is, it controls
atleast 20% of total share capital or controls business decisions under an
agreement. Associate Company is not a subsidiary of the company. It
includes a joint venture company irrespective of the shareholding.
1
2 The Companies Act, 2013 Ready Referencer
Control [Section 2(27)]

Control shall include the right to appoint majority of the directors or to
control the management or policy decisions exercisable by a person or
persons acting individually or in concert, directly or indirectly, including by
virtue of their shareholding or management rights or shareholders agree-
ments or voting agreements or in any other manner.
Dormant Company
A company which is formed and registered under the Act, for a
future project or to hold an asset or intellectual property and has
no significant accounting transaction, such a company may make
an application to the Registrar for obtaining the status of a dormant
company [Section 455(1)].
A dormant company may become an active company by submitting
an application to the Registrar accompanied by such documents as
may be prescribed [Section 455(5)].
Financial Statement [Section 2(40)]
Financial statement includes:
(a) Balance sheet as at the end of the financial year.
(b) Profit and loss account / income and expenditure account.
(c) Cash flow statement.
(d) A statement of changes in equity (if applicable).
(e) Explanatory notes annexed to balance sheet, profit and loss account,
cash flow statement and statement of changes in equity.
Financial Year [Section 2(41)]
Every company or body corporate to have financial year ended

March 31, every year.
Company incorporated on or after January 1 of a year to have
financial year ending March 31 of the following year (15 months)
A company which is a holding company or subsidiary of a company
incorporated outside India and is required to follow a different
financial year for consolidation of its accounts, outside India may
have a different financial year, if the Tribunal allows.
Existing companies and bodies corporate should align their financial
year to March 31, by March 2016.
Free Reserves [Section 2(43)]
Free reserves means such reserves which as per the latest audited
The Companies Act, 2013 Ready Referencer 3
balance sheet of a company are available for distribution as dividend.
Therefore, securities premium, capital reserves, debenture redemption
reserves, statutory reserves, revaluation reserve and the like will not form
part of free reserves. Further, any change in carrying amount of an asset
or of a liability, recognized in equity including surplus in profit and loss
account on measurement of the asset or the liability at fair value will not
form part of free reserves.
Key Managerial Personnel (KMP) [Section 2(51)]
KMP means:
(a) The CEO or Managing Director or Manager
(b) Whole-time Director
(c) Chief Financial Officer
(d) Company Secretary
The CEO and Manager need not be a member of the Board.
Listed Company [Section 2(52)]
A listed company means a company (public or private) which has any

of its securities listed on any recognized stock exchange.
One Person Company
One Person Company (OPC) has been defined to mean a private

company which has only one person as a member [Section2(62)].
The said member should be a natural person. The words One
Person Company shall be mentioned in brackets below the name
of the company, wherever it is printed, affixed or engraved
[Section 12(3) second proviso].
The memorandum of OPC shall indicate the name of the person

who shall become the member of the company in the event of the
death of the subscriber. The name of such person can also be
changed by the member [Section 3(1)(c) first proviso].
No person shall be eligible to incorporate more than one OPC or

become nominee in more than one such company. No minor shall
become member or nominee of OPC or can hold shares with
beneficial interest.
The OPC shall not be required to hold annual general meeting
[Section 96(1)]. The financial statement of a OPC may not include
the cash flow statement [Section 2(40)] proviso.
Where there is only one director on the Board of directors of a
OPC, for any business required to be transacted at a meeting of
the Board of directors of the OPC, it shall be sufficient if the
resolution is entered in the minutes book and signed and dated by

such director. Such date shall be deemed to be the date of the
meeting of the Board of directors for all purposes under the Act
[Section 122(4)].
The provisions of Section 98 and Sections 100 to 111 (both

inclusive) dealing with meetings of members do not apply to a
OPC.
Private Company
A private company has been defined to mean inter alia a company
(except a OPC) which limits the number of its members to two
hundred [Section 2(68)]. If it invites or receives any money from
its members or public it will be deemed a deposit. It is prohibited
from inviting the public to subscribe for any of its securities.
Related Party [Section 2(76)]
Related Party means:
1. A director or his relative.
2. A key managerial personnel or his relative
3. A firm, in which a director, manager or his relative is a partner.
4. A private company in which a director or manager is a member or
director.
5. A public company in which a director or manager is a director and
holds alongwith his relatives more than 2% of its paid up share
capital.
6. Any body corporate whose board of directors, managing director
or manager is accustomed to act in accordance with the advice,
directions or instructions of a director or manager.
7. Any person on whose advice, directions or instructions a director
or manager is accustomed to act [Persons giving professional advice
not covered].
8. Any company which is
(a) a holding company, subsidiary or an associate company of such
company; or
(b) a co-subsidiary of such company.
9. A director or key managerial personnel of the holding company or
his relative.
Relatives [Section 2(77)]
Relatives with reference to any person for the purpose of the Act,
means anyone who is related to another if:
(a) they are members of a HUF;
(b) they are husband and wife;
If he or she is related to another in the following manner, namely:
(c) father (including step-father);
(d) mother (including step-mother);
(e) son (including step-son);
(f) sons wife;
(g) daughter;
(h) daughters husband;
(i) brother (including step brother);
(j) sister (including step-sister).
Small Company
Small company has been defined to mean, a company other than a
public company:
(a) Whose paid-up capital does not exceed fifty lakh rupees or such
higher amount as may be prescribed which shall not be more than
five crore rupees; or
(b) Whose turnover as per its last profit and loss account does not
exceed two crore rupees or such higher amount as may be
prescribed which shall not be more than twenty crore rupees.
Small Company cannot be a:
A public company;
A holding company or a subsidiary company;
A company registered under section 8 (formation of companies
with charitable objects etc.) of the Act; or
A company or body corporate governed by any special Act
[Section 2(85)].
Small companies shall be subjected to lesser stringent regulatory
framework.
Subsidiary Company [Section 2(87)]
Subsidiary company has been defined in relation to a holding
company, to mean a company in which the holding company
controls the composition of the Board of Directors; or
exercises or controls more than one-half of the total share
capital either at its own or together with one or more of its
subsidiary companies.
Total share capital means aggregate of the :
(a) paid-up equity share capital; and
(b) convertible preference share capital.
A company which is a subsidiary of a subsidiary company, shall
also be a subsidiary of the holding company.
A company shall be deemed to control the composition of another
companys Board of Directors, if that company has the power to
appoint or remove all or majority of the directors of the other
company.
The Central Government may prescribe such specific class or classes
of companies which shall not have layers of subsidiaries beyond
such numbers as may be prescribed. This restriction on the number
of step down subsidiary companies has been introduced to prevent
the abuse of diversion of funds through many step down
subsidiaries.
The expression company includes any body corporate.
Chapter II
INCORPORATION OF COMPANY AND MATTERS

INCIDENTIAL THERETO
Memorandum and Articles of Association

The objects clause of the Memorandum of Association shall be
divided into (a) the objects to be pursued by the company on its
incorporation and (b) matters which are necessary for furtherance
of the objects specified in (a) above [Section 4(1)(c)].
The articles of a company may contain provisions for entrenchment,

meaning that certain provisions of the articles may be altered
subject to compliance with specified conditions or procedures,
which are more restrictive than those applicable in the case of a
special resolution [Section 5(3)].
The provisions for entrenchment in the articles can be made at

the time of incorporation of the company; or by an amendment to
the articles agreed to by all the members if the company is a
private company and by a special resolution if the company is a
public company [Section 5(4)].
Incorporation of Companies
Various documents and information are required to be submitted

to the Registrar of Companies for registration of a company
[Section 7(1)].
Where any person furnishes any false or incorrect particulars of

any information or suppresses any material information, he shall
be liable under section 447 of the Act (for fraud) [Section 7(5)].
Where at any time after the incorporation of a company, it is

proved that the company has been incorporated by furnishing
incorrect or false information or representation or by suppressing
any material fact or information in any of the document or
declaration filed or made for incorporating such company, or by
any fraudulent action, the promoters, the persons named as the
first directors of the company and the persons making the
declaration confirming compliance with the requirements of the
Act, shall each be liable under section 447 of the Act (for fraud)
[Section 7(6)].
7
Commencement of Business
Every company (public and private) having share capital shall not
commence business or exercise any borrowing power unless:
a) a declaration is filed by a director with the Registrar, stating
that every subscriber to the memorandum has paid the value
of the shares agreed to be taken by him and that the paid-up
share capital of the company is not less than five lakh rupees
in case of a public company and not less than one lakh rupees
in case of a private company on the date of making of the
declaration; and
b) the company has filed with the Registrar a verification of its
registered office within thirty days of incorporation in the
prescribed manner [Section 11(1)].
Where a company fails to file such a declaration within 180 days
of the date of incorporation, the Registrar may initiate action for
removal of the name of the company from the register of companies
[Section 11(3)].
Change of Name of Company
Any change in the name of the company would require passing a
special resolution by the shareholders and approval of the central
government. Approval of central government is not required if
the change involves only addition thereto or deletion therefrom
of the word private.
Where a company has changed its name(s) during the last two
years it shall paint or affix or print along with its name the former
name or names so changed during the last two years [Section
12(3) first proviso].
Every company shall print in all its business letters, bill heads,
letter papers and in all its notices and other official publications its
name, address of the registered office, corporate identity number,
telephone number, fax number (if any), e-mail and website
addresses, if any [Section 12(3)(c)].
Alteration of Memorandum and Articles
The provisions of memorandum of association and articles of
association may be altered by a special resolution [Sections 13(1)
and 14(1)].
Additional stipulations have been made for compliance by a
company which has raised money from public through prospectus
and still has any unutilised amount out of the money raised
with regard to change of its objects in the memorandum. In
such an event, the dissenting shareholders shall be given an
opportunity to exit by the promoters and shareholders having
control in accordance with the regulations specified by the SEBI
[Section 13(8)].
Conversion of a public company into a private company (including
OPC) would require prior approval of the Tribunal and will be
effective only after such approval. No such approval is required
for conversion of a private company into OPC or OPC into a private
company.
Service of Documents [Section 20(1)]
Service of documents by speed post or any courier service or
electronically have been added as other modes of serving
documents on a company or an officer thereof or on Registrar of
Companies or any member of a company.
In case of delivery by post, such notice shall be deemed to have
been effected in the case of a notice of a meeting at the expiration
of 48 hours after the letter containing the same is posted and in
any other case at the time at which the letter would be delivered
in the ordinary course of post.
Chapter III
PROSPECTUS AND ALLOTMENT OF SECURITIES
Modes of raising Resources by Companies

A public company may issue securities :
(a) to public through prospectus; or
(b) through a private placement; or
(c) through a rights issue or a bonus issue [Section 23(1)].
Aprivate company issuing securities by private placement is also
required to comply with the provisions of the Act [Section 23(2)(b)].
Public offer includes initial public offer or further public
offer or offer for sale of securities to the public by a company
[Section 23(2) Explanation].
Prospectus (Section 26)
Contents of prospectus are listed out in the section and in the
Companies (Prospectus and Allotment of Securities) Rules, 2014.
A company making a public issue also to comply with the disclosure
requirements and matters to be stated in the prospectus as per
SEBI (ICDR) Regulations, 2009.
Variation in terms of contract or objects in prospectus (Section 27)

Variation in the terms of a contract referred to in the prospectus
or objects for which the prospectus was issued can be made not
more than one time in any particular public issue by passing a
special resolution through Postal Ballot by shareholders.
Justification in full for such variation should be clearly set out in
the notice and published in newspapers.
The dissenting shareholders who do not consent to such variation
shall be given an exit offer by promoters or controlling shareholders
at such exit price and in such manner and on such conditions as
may be specified by the SEBI.
A company shall not use any amount raised by it through prospectus
for buying, trading or otherwise dealing in equity shares of any
other listed company [Section 27 read with Rule 7 of the Companies
(Prospectus and Allotment of Securities) Rules, 2014.
10
Offer for Sale of Securities
Existing members of a company (including a listed company), may

in consultation with the Board of directors offer part of their holding
of shares to the public under a prospectus (Section 28).
Penal Provisions
Criminal liability for misstatement in prospectus (Section 34) :
If a prospectus issued includes any statement which is untrue
or misleading in form or context in which it is included or
where any inclusion or omission of any matter is likely to mislead,
every person who authorises the issue of the prospectus shall
be criminally liable under Section 447 (for fraud).
Civil liability for mis-statement in Prospectus (Section 35).
Where it is proved that a prospectus includes any statement
which is misleading to every person who has subscribed to
the securities and has sustained any loss or damage as a
consequence, the company and every person who :
(a) is a director of the company at the time of issue of
prospectus;
(b) has authorised himself to be named in the prospectus as a
director;
(c) is a promoter of the company;
(d) has authorised the issue of the prospectus and
(e) is an expert.
shall be liable to pay compensation to every person who has
sustained any loss or damage [Section35(1)].
Above persons are personally liable without any limitation of
liability for all losses incurred by the subscribers if it is proved
that prospectus was issued with intent to defraud the applicants
[Section 35(3)].
Punishment for fraudulently inducing persons to invest money
(Section 36).
Any person who either knowingly or recklessly makes any
statement, promise or forecast which is false, deceptive or
misleading or deliberately conceals any material fact to induce
another person to enter into any agreement inter alia with a
view to obtaining credit facilities from any bank or financial
institution, he shall be liable for action under section 447 (for
fraud) (Section 36).
Action by affected persons (Section 37).
A class action suit (action by affected persons) may be filed or
any other action may be taken by any person, group of persons

affected by any misleading statement or the inclusion or
omission of any matter in the prospectus (Section 37).
Punishment for personation for acquisition of securities
(Section 38)
Any person who makes or abets making an application including
multiple applications in a fictitious name for acquiring or
subscribing for the securities of a company, shall be liable
under section 447. The Court may order disgorgement of gain,
if any, and seizure and disposal of securities in possession of
such convicted person Section 38(1)] and Section 38(3).
Private Placement (Section 42)
Some of the important provisions relating to private placement
are as follows:
(a) Provisions are common to all class of companies private,

public (listed and unlisted).
(b) Listed companies will be governed by SEBI (ICDR) Regulations,

2009.
(c) Prior approval of shareholders by passing a special resolution

is required for each offer or invitation for each kind of security
that is equity, preference shares or debentures. Company to
pass a special resolution once in a year for all offers made
during the year in case of issue of non-convertible debentures.
(d) The offer in a financial year can be made to not more than
200 persons in the aggregate (excluding QIBs and Employees
under ESOP). This restriction would be reckoned individually
for each kind of security, that is, equity share, preference
share or debenture.. If a company allots securities to more
than the prescribed number of persons, it shall be deemed to
be an offer to the public;
(e) Even an agreement to allot securities to more than the

prescribed number of persons (whether money received or
not) shall be deemed to be an offer to the public.
(f) No offer or invitation of another kind of security shall be made

unless allotment with respect to offer or invitation made earlier
in respect of any kind of security is completed.
(g) The value of such offer shall be with an investment size of not
less than Rs.20,000 of face value of the securities.
(h) The payment for subscription to securities shall be made from

the bank account of the person subscribing to such securities.
(i) The offer or invitation shall be made through a private
placement offer letter;
(j) The company should allot the securities within 60 days from
the date of receipt of the application money, failing which
application money will be refunded;
(k) Similar to that in a public issue, the amount received in a
private placement shall be kept in a separate bank account
and shall not be utilized unless the securities are allotted
[Section 42(6)];
(l) Complete record of private placement offers and private
placement offer letter to be filed with the Registrar of
Companies and in case of listed companies also with SEBI.
The private placement offer can be made by a company only to
such persons whose names are recorded by the company prior to
the invitation and the offer shall be made to such persons by
name [Section 42(7)].
Stringent penal provisions have been set out if a company makes
private placement in contravention of the various provisions set
out in the Act [Section 42(10)].
Power of SEBI (Section 24)
Provisions contained in Chapter-III (public offer and private
placement), Chapter-IV (share capital and debentures) and in
section 127 (punishment for failure to distribute dividends) shall,
in so far as they relate to (a) issue and transfer of securities; and
(b) non-payment of dividend by listed companies or those
companies which intend to get their securities listed on any
recognized stock exchange in India be administered by SEBI.
SEBI shall have powers to enforce provisions relating to forward
dealings in securities and insider trading of securities of listed
companies and file a complaint in the court of competent
jurisdiction (section 458).
Chapter IV
SHARE CAPITAL AND DEBENTURES
Kinds of Share Capital (Section 43)

The share capital of a company shall be of two kinds namely:
(a) Equity share capital:
(i) with voting rights; or
(ii) with differential rights as to dividend, voting or otherwise.
(b) Preference share capital
Duplicate Certificate of Shares [Section 46(5)]
If a company with intent to defraud, issues a duplicate certificate
of shares it shall be punishable with stringent fines. Further, every
officer of the company who is in default shall be liable under
section 447. The punishment will be non-compoundable.
Duplicate share certificate shall not be issued without prior consent
of the Committee of Directors. A listed company should issue
duplicate share certificate within fifteen days from the date of
submission of complete documents with the company and an
unlisted company should issue the same within three months.
Variation of Shareholders Rights (Section 48)
Rights attached to a class of shares may be varied with consent in
writing of the holders of not less than three-fourths of the issued shares
of that class or by means of a special resolution passed by the shareholders
of that class. If the variation affects the rights of any other class of
shareholders, consent of such other class is necessary in a similar way.
Issue of Shares at a Premium / Discount
A company may issue shares at a premium (Section 52)
The Act, prohibits issue of shares (except sweat equity shares) at
a discount by a company and any shares issued at a discount is
void (Section 53).
Preference Shares
No company shall issue any preference shares which are
irredeemable. A company may issue preference shares liable to
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be redeemed within a period not exceeding twenty years from
the date of their issue [Section 55(1) and (2)].
A company may issue preference shares redeemable beyond
twenty years for infrastructure projects and the redemption will
be at the option of the preference shareholders. Companies
engaged in infrastructure projects may redeem preference shares
from the 21st year at the rate of 10% minimum redemption such
that the preference shares are redeemed not later than 30 years
from the date of their issue [Section 55(2) proviso read with the
Rules].
In case of such class of companies as may be prescribed, the
premium, if any, payable on redemption of preference shares shall
be provided for out of profits of the company [Section 55(2) proviso
(d)(i)]. Premium payable on redemption of preference shares issued
before commencement of the Act shall be provided either out of
profits of the company or securities premium account.
Where dividends payable in respect of a class of preference shares
(whether cumulative or non-cumulative) are in arrears for a period
of two years or more, such class of preference shareholders shall
have a right to vote on all resolutions placed before a meeting of
the company [Section 47(2) second proviso].
Transfer and Transmission of Securities (Section 56)
Every company shall deliver the certificates of all securities allotted,
transferred or transmitted:
(a) within two months from the date of incorporation to the subscribers
of Memorandum of Association;
(b) within two months from the date of allotment to the allottees;
(c) within one month from the date of receipt of instrument by the
company to the transferees (including transmission);
(d) within six months from the date of allotment of debentures to the
allottees of debentures.
Alteration of Share Capital
A limited company having share capital may consolidate and divide all
or any of its share capital into shares of larger amount than its existing
shares; where such consolidation or division results in changes in the voting
percentage of shareholders, it shall not take effect unless it is approved by
the Tribunal [Section 61(1)(b)].
Further Issue of Capital (Section 62)
A company having share capital may if authorised by a special
resolution, increase its subscribed capital, by making an offer to
any persons other than by way of rights, either for cash or for
consideration other than cash. The price of the shares so offered
in such cases shall be determined by a registered valuer except in

case of listed companies [Section 62(1)(c) and Rule 13(1) proviso].
A Rights offer can be made by a company with the approval of
the Board of Directors. The issue price of Rights Shares need
not be valued by the registered valuers. Listed companies whose
shares are listed on the Stock Exchange should adhere to the
requirements set out under the SEBI (ICDR) Regulations, 2009.
The rights offer shall be kept open for not less than 15 days and
not more than 30 days. Letter of offer shall be despatched through
registered post or speed post or through electronic mode to all
existing equity shareholders at least three days before opening of
the issue.
Employees Stock Option [Section 62(1)(b)]
A company having share capital may make an offer to the employees
under a scheme of employees stock option, subject to passing a special
resolution by the company. The price of the shares offered under ESOP is
not required to be determined by a registered valuer. The issue of ESOP by
unlisted companies will be governed by Rule 12 of the Companies (Share
Capital and Debentures) Rules, 2014. The issue of ESOP shares by a listed
company whose shares are listed will be governed by Regulations issued
by SEBI.
Issue of Bonus Shares (Section 63)
A company may issue fully paid-up bonus shares to its members
out of its free reserves or securities premium account or the capital
redemption reserve account.
No bonus shares shall be issued by capitalising reserves created
by the revaluation of assets. Bonus shares shall not be issued in
lieu of dividend.
A company cannot issue bonus shares unless :
(a) it is authorised by its articles;
(b) it has been recommended by the Board and approved at a
general meeting;
(c) it has not defaulted in payment of interest or principal in respect
of fixed deposits or debt securities issued by it;
(d) it has not defaulted in the payment of statutory dues of the
employees such as contribution to provident fund, gratuity
and bonus;
(e) partly paid-up shares, if any, outstanding on the date of
allotment, are made fully paid-up.
Recommendation of the Board of a bonus issue cannot be withdrawn
subsequently.
Reduction of Share Capital (Section 66)
Subject to confirmation by the Tribunal, a company with share
capital, may by passing a special resolution reduce the share capital
in any manner.
No reduction of share capital can be made if a company is in
arrears in the repayment of any deposits accepted by it or interest
payable thereon.
The Tribunal may make an order confirming the reduction of share
capital, if it is satisfied that:
i) the debt or claim of every creditor is discharged or determined
or has been secured or consent obtained; and
ii) the accounting treatment proposed by the company for such
reduction is in conformity with the accounting standards and
a certificate to that effect by the companys auditor has been
filed with the Tribunal.
Debentures (Section 71)
A company may issue debentures convertible or non-convertible.
A company issuing debentures to more than 500 persons for
subscription is required to appoint a Debenture Trustee.
A company issuing debentures should execute debenture trust
deed not later than sixty days after the allotment of debentures.
No secured debentures can be issued with a redemption period
beyond 10 years from the date of issue. However, a company
engaged in setting up infrastructure projects can issue debentures
which are redeemable not beyond thirty years from the date of
issue.
A company (including manufacturing / infrastructure) issuing NCDs
shall create Debenture Redemption Reserve (DRR) equivalent to
25% of the amount raised by the debenture issue before the
debenture redemption commences.
No DRR is required for debentures issued by All India Financial
Institutions and Banking Companies.
NBFCs registered under RBI Act shall create DRR of 25% for
debentures issued through public issue. No DRR in case of privately
placed debentures by them.
The company shall on or before 30th April each year invest or
deposit a sum which is not less than 15% of the amount of its
debentures maturing during the year ending 31st of March of the
next year.
DRR shall not be utilised by the company except for the purpose
of redemption of debentures.
Chapter V
ACCEPTANCE OF DEPOSITS BY COMPANIES
No company shall invite, accept or renew deposits from the public

except eligible public companies in accordance with the provisions
of the Act [Section 73(1)].
Provisions of the Act for acceptance of deposits shall not apply to
a banking company and a non-banking financial company [Section
73(1) proviso].
Acceptance of Deposits from members [Section 73(2)]
A company (private and public) inviting deposits from its
members shall:
(a) secure the approval of its members by a resolution passed
at a meeting;
(b) comply with the provisions of the Companies (Acceptance
of Deposits) Rules, 2014
(c) Issue a circular to its members showing:
(i) the financial position of the company;
(ii) credit rating obtained;
(iii) total number of depositors and amount due towards
deposits in respect of any previous deposits accepted
by the company.
(iv) other particulars, such as:
(a) type of deposit, whether secured or unsecured;
(b) objects of raising the deposit;
(c) extent of deposit insurance
Various enhanced disclosures have been provided under the
Companies (Acceptance of Deposits) Rules, 2014
Limit for acceptance of deposits from members
No company including a private company can accept deposits
from its members in excess of 25% of the aggregate of its
paid-up capital and free reserves.
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Acceptance of deposits from public (Section 76)
Eligible public companies (that is public companies having a
networth of not less than Rs.100 crore or a turnover of not
less than Rs.500 crore) and which has secured shareholders
consent by passing a special resolution may accept deposits
from the public by following the procedure as stated above
for accepting deposits from its shareholders. It shall obtain
rating from recognized credit rating agency every year during
the tenure of deposits and inform such rating to the pubic.
In case of secured deposits, the company should create charge
on its assets within a period of thirty days of acceptance.
Limits for acceptance of deposits from public
No eligible company can accept / renew:
(a) deposits from members exceeding 10% of its paid-up share
capital and free reserves (outstanding at any point of time);
(b) deposits from public exceeding 25% of its paid-up share
capital and free reserves (outstanding at any point of time).
No government company can accept deposits in excess of

35% of its paid up share capital and free reserves (outstanding
at any point of time)
Major conditions for acceptance of Deposits
Period : Deposits not repayable in less than six months or

more than thirty six months (may accept deposits repayable
not earlier than three months upto 10% of paid up capital and
free reserves of the company).
Rate of interest and brokerage : Not exceeding a rate maximum

permitted by RBI for acceptance of deposits by NBFC
companies. The person authorised in writing by the company
only can solicit deposits and be entitled to brokerage.
General : In case of adverse change in credit rating, depositors

will be given chance to withdraw deposits without any penalty.
Which are not exempted deposits? (Important Items)
Application money or advance money received for subscription

of securities, if securities are either not allotted within 60
days from the date of receipt of application money or refunded
within 15 days from the completion of 60 days, such amount
shall not be treated as exempt deposits.
Amount received from a relative of a director is not an exempt
deposit.
Amount received from a member by a private company is not

an exempt deposit.
Any amount received as an advance for supply of goods or
service unless they are appropriated against supply of goods
and services within 365 days from the date of acceptance of
such advance is not an exempt deposit.
Note: Any amount received by the company, whether in the form of
instalments or otherwise from a person with promise or offer to
give returns in cash or in kind on completion of a specified period
with any additional contributions made by the company as part of
such promise or offer shall be treated as a deposit. This explanation
to clause (c) of sub-rule (1) of Rule 2 to the Companies
(Acceptance of Deposits) Rules, 2014 has far reaching
repercussions.
Deposits accepted before the Commencement of this Act
Where a company has accepted deposits before April 1, 2014 and
any amount or interest on such deposit remains unpaid on April 1,
2014, the company shall repay the same on or before March 31,
2015 or from the date on which such payments are due, whichever
is earlier [Section 74(1)].This condition shall not apply if the
company complies with the requirements under the Companies
Act, 2013 and the Rules and continues to repay the deposits and
interest for the remaining period of such deposits. The company
shall file by August 31, 2014 with the Registrar of Companies a
statement of all deposits accepted by the company and sums
remaining unpaid as on March 31, 2014 on such amount with
interest thereon alongwith the arrangements made for such
repayment.
In case of failure to make such repayment, if it is proved that the
deposits had been accepted with intent to defraud the depositors
or for a fraudulent purpose, every officer of the company who
was responsible for accepting such deposits, shall be personally
responsible without limitation of liability for all or any of the losses
or damages that may have been incurred by the depositors.This is
besides his liability under section 447, that is punishment for fraud
(Section 75).
Further, class action suit, proceedings or other action may be taken
by any person, group of persons or any association of persons,
who had incurred loss as a result of the failure of the company to
repay the deposits or part thereof or any interest thereon.
Chapter VI
REGISTRATION OF CHARGES
Every company creating or modifying a charge should register the

charge with Registrar of Companies within 30 days.
If the company fails to register a charge, the charge holder may
file the charge directly with Registrar of Companies.
Registrar of Companies may allow such registration to be made
within 300 days of creation of charge on payment of additional
fees.
Satisfaction of charge should be reported to Registrar of Companies
within 30 days; similar to registration of charges Registrar of
Companies may allow an additional period of 270 days on payment
of additional fee.
Central government may allow further time beyond 300 days for
filing of any charge for registration of charge or satisfaction of any
charge.
The Register of Charges, instrument of charges etc. shall be open
for inspection to any member or creditor of the company or any
other person.
21
Chapter VII
MANAGEMENT AND ADMINISTRATION
Register of Members etc. (Section 88)

Every company shall keep and maintain (a) register of members
and index thereof; (b) register of debentureholders and index
thereof; and (c) register of any other security holders and index
thereof.
A company may, if so authorised by its articles, keep foreign
register containing the names and particulars of the members,
debentureholders and other security holders or beneficial owners
residing outside India.
Annual Return (Section 92)
Every company shall prepare the annual return containing the
following additional particulars as at the close of the financial year
namely:
1) its principal business activities;
2) particulars of its holding, subsidiary and associate companies;
3) its promoters, directors, key managerial personnel along with
changes therein since the close of the last financial year;
4) meetings of members or a class thereof, Board and its
committees along with attendance details;
5) remuneration of directors and key managerial personnel;
6) penalty or punishment imposed on the company, its directors
or officers and details of compounding of offences and appeals
made against such penalty or punishment;
7) details in respect of shares held by or on behalf of the Foreign
Institutional Investors indicating their names, addresses,
countries of incorporation, registration and percentage of
shareholding held by them;
8) Annual general meeting various details;
9) Turnover and networth of the company at the end of the
financial year;
22
10) Shareholding of promoters with encumbrance details, if any;
11) Date-wise increase / decrease in the shareholding of (a)
promoters; (b) directors and KMPs; (c) top ten shareholders
(other than directors, promoters and holders of GDR/ADR);
12) Various other disclosures such as (a) particulars of forms /
returns filed during the year; (b) particulars of inter-corporate
loans, investments etc. (c) contracts or arrangements with
related parties; (d) limits under section 180(1)(c) and section
186(2) of the Act; and (e) consolidation / sub-division of shares
etc.
Signing of Annual Return
Annual return of every company except OPC and small company needs
to be signed by a director and company secretary and where there is no
company secretary it shall be signed by a practicing company secretary.
Certification of Annual Return
Annual return of a listed company and companies having a paid-up
share capital of Rs. 10 crore or more and a turnover of Rs.50 crore or more
shall be certified by a practicing company secretary stating that the annual
return discloses the facts correctly and adequately and that the Company
has complied with all the provisions of the Act.
Return for Change in Promoters Stake (Section 93)
Every listed company shall file a return with the Registrar with respect
to changes (increase or decrease of 2% or more) in the shareholding
position of promoters and the top ten shareholders of such company in
each case, within fifteen days of such change.
Annual General Meeting (Section 96)
Every company other than OPC shall in each year hold a general
meeting as its annual general meeting.
Every annual general meeting shall be called during business hours,
that is, between 9 a.m. and 6 p.m. on any day that is not a National
holiday. Therefore, annual general meeting can be held on a Sunday
or a public holiday, which is not a National holiday.
Notice of General Meeting (Sections 101 and 102)
A general meeting can be called by giving not less than clear
twenty one days notice either in writing or through electronic
mode.The meeting can be called by giving a shorter notice with
the consent in writing or by electronic mode, of not less than
ninety five per cent of the members who are entitled to vote at
such meeting.
Notice of every meeting should be given to every director and
auditors of the company.
Nature of concern or interest, financial or otherwise of every

director, manager and every other KMP and their relatives shall be
given in the statement annexed to the notice.
Quorum for Meetings (Section 103)
In case of a public company, the quorum for a general meeting
shall be :
i) five members personally present if the number of members
as on the date of the meeting is not more than one thousand;
ii) fifteen members personally present if the number of members
as on the date of the meeting is more than one thousand but
up to five thousand;
iii) thirty members personally present if the number of members
as on the date of the meeting exceeds five thousand.
The Articles of a company may provide for a quorum of a larger
number of members.
In the case of a private company two members personally present
shall be the quorum for a meeting.
Adjournment of Meeting (Section 103)
In case of an adjourned meeting or of a change of day, time or
place of meeting, the company shall give not less than three days
notice to the members either individually or by publishing an
advertisement in the newspapers at the place where the registered
office of the company is situated.
Chairman of meetings (Section 104)
Articles of a company may provide that the Chairperson, if any, of
the Board shall preside as Chairperson at every general meeting
of the company. If the Articles do not provide otherwise, the
members personally present at the meeting shall elect one of
themselves to be the Chairperson thereof.
Proxies (Section 105)
A proxy shall not act on behalf of more than fifty members and
holding in the aggregate not more than 10% of the total share
capital of the company carrying voting rights.
A member of a company registered with charitable objects cannot
appoint any other person as his proxy unless such other person is
also a member of such company.
Voting through electronic means (Section 108)
Central Government has under Rule 20 of the Companies
(Management and Administration) Rules, 2014 prescribed the
procedure for e-voting by every listed company / a company having
not less than 1000 shareholders (effective 1st January 2015 this is
mandatory).
Notice of the meeting to be sent by (a) registered post or speed
post or (b) through e-mail or (c) by courier.
Notice to be placed on companys website, if any and website of
the agency providing e-voting platform.
E-voting to remain open for not less than one day and not more
than three days; such voting period to be completed three days
prior to the date of the general meeting.
Record date to be fixed for entitling shareholder to vote during
e-voting period.
Shareholders cannot change his vote subsequently once it is cast.
Board of directors to appoint a scrutinizer to scrutinize e-voting
process.
Advertisement in newspapers has to be given five days before
commencement of e-voting in a vernacular and English daily.
Scrutinizer to unblock the votes after e-voting period in presence
of two witnesses and to forward his report to Chairman not
exceeding three working days from the conclusion of e-voting
period.
Chairman who presided over the general meeting to declare the
combined voting results (that is results of e-Voting and results of
voting taken place on poll at the meeting) based on scrutinizers
report and the resolutions set out in the notice shall be deemed to
be passed as per the scrutinizers report on the date of the meeting
of the members.
Results declared alongwith scrutinizers report to be placed on
companys website and e-voting service providing agency s
website.
Demand for Poll (Section 109)
Poll can be demanded by members or proxy holding not less than
1/10th of the total voting power or holding shares on which not less than
Rs.5 lakh is paid up.
Postal Ballot (Section 110)
A company, both listed and unlisted, other than OPCs and companies
having members upto 200, shall transact such items of business as are set
out under Rule 22 of the Companies (Management and Administration)
Rules, 2014 or may transact any items of business, other than ordinary
business and any business in respect of which directors or auditors have a
right to be heard at any meeting by means of postal ballot. The resolution
passed by means of postal ballot shall be deemed to have been duly passed
at a general meeting convened in that behalf.
Use of Electronic Means
The Act recognises the service of documents, including notices
for meetings (Board, general meeting, etc.); maintenance of
records, registers and documents and inspection of records,
registers and documents in electronic form and voting through
electronic means.
The Act also provides for participation in meetings through
electronic mode and voting on resolutions through electronic
means. Every listed company and a company having 1000 or more
shareholders should provide facility for e-Voting.
Resolution requiring Special Notice (Section 115)
Where, by any provisions contained in the Act or in the Articles of
Association of a company, special notice is required, notice of the intention
to move such resolution shall be given to the company by member(s)
holding not less than one percent of total voting power or holding shares
on which an aggregate sum of not less than five lakh rupees has been paid
up on the date of the notice.
Resolution and Agreements to be Filed (Section 117)
This section corresponds to section 192 of the Companies Act, 1956,
which requires special resolutions and certain other resolutions passed by
the shareholders should be filed with the Registrar of Companies. The
2013 Act additionally requires filing of all resolutions passed by the Board
of Directors under section 179(3).
Minutes of General Meeting / Board Meeting (Section 118)
Every company shall observe secretarial standards with respect to
General and Board meetings specified by the Institute of Company
Secretaries of India and approved by the Central Government.
Report on Annual General Meeting (Section 121)
Every listed public company shall prepare and file with the Registrar of
Companies, a report on each annual general meeting confirming that the
meeting was convened, held and conducted as per the provisions of the
Act and the rules made thereunder.
Chapter VIII
DECLARATION AND PAYMENT OF DIVIDEND
Dividend can be declared out of profits after providing for

depreciation. Depreciation as per Schedule-II to the Act is to be
provided on the assets over its useful life [Section 123(1)].
It is not mandatory to transfer certain percentage of profits to
reserves account if a company declares dividend beyond a particular
percentage.
In the event of inadequate profits or absence of profits, a company
may declare dividend out of its accumulated profits earned during
the previous years and transferred to reserves, in accordance with
the Companies (Declaration and Payment of Dividend) Rules, 2014
[Section 123(1) second proviso]. In particular, no company shall
declare dividend unless carried over previous losses and
depreciation not provided in previous years are set off against
profit of the company for the current year.
Dividend shall be declared or paid only out of free reserves of a
company [Section 123(1) third proviso].
No dividend can be declared if there is default in connection with
acceptance / repayment of deposits and such default continues.
The Board of directors of a company may declare interim dividend
during any financial year out of the surplus in the Profit and Loss
Account as well as profits of the financial year in which such interim
dividend is sought to be declared. In case, the company has incurred
a loss in the current financial year up to the end of the quarter
immediately preceding the date of the declaration of interim
dividend, such interim dividend shall not be declared at a
rate higher than the average of dividends declared by the
company during the immediately preceding three financial years
[Section 123(3)].
The company shall within ninety days of making any transfer to
the Unpaid dividend account, prepare a statement containing
names, their last known addresses and the unpaid dividend to be
paid to each person and place it on the web-site of the company
and also on any other web-site approved by the Central Government
for this purpose [Section 124(2)].
27
Monies transferred to the Unpaid Dividend Account remaining

unclaimed or unpaid for a period of seven years from the date of
such transfer, shall be transferred to the Investor Education and
Protection Fund (IEPF) [Section 124(5)].
All shares in respect of which unpaid or unclaimed dividend has

been transferred to IEPF shall also be transferred by the company
in the name of IEPF. Any claimant of shares transferred to IEPF
shall be entitled to claim the transfer of shares from IEPF in
accordance with such procedure and on submission of such
documents as may be prescribed [Section 124(6)].
The persons whose monies were transferred to IEPF shall be
entitled to get refund out of the Fund on a claim made to the Fund
[Section 125(3)].
Chapter IX
ACCOUNTS OF COMPANIES
Books of Account etc. to be kept by Company (Section 128)

Books of account and other relevant papers and financial statement
may be kept in electronic mode.
Any director may inspect books of account at the registered office
during business hours; copies of any financial information
maintained outside the country shall also be produced for
inspection.
The inspection in respect of any subsidiary of the company shall
be done only by the person authorised by a resolution of the Board
of directors.
Financial Statement (Section 129)
The financial statement of a company shall give a true and fair
view of the state of affairs of the company or companies, comply
with the accounting standards notified under section 133 of the
Act and shall be in the form specified in Schedule III to the Act.
The items contained in the financial statements shall be in
accordance with the accounting standards. Financial statements
shall include any notes or documents annexed or attached thereto,
giving information required to be given by the Act and allowed
by the Act to be given in the form of such notes or documents
[Section 129(1)].
The financial statements for every year shall be laid before the
annual general meeting of the company by the Board of Directors
[Section 129(2)].
Where a company has one or more subsidiaries, it shall prepare a
consolidated financial statement of the company and of all the
subsidiaries in the same form and manner as that of the holding
company, which shall also be laid before the annual general meeting
[Section 129(3)]. The company shall also attach alongwith its
financial statement, a separate statement containing the salient
features of the financial statement of its subsidiaries.
Board of directors and shareholders shall approve consolidated
financial statements (CFS) as well. CFS is necessary at each level
of holding company and subsidiary company.
29
The company shall disclose in its financial statements, the deviation,

if any, from the accounting standards, the reasons for such deviation
and the financial effects, if any, arising out of such deviation [Section
129(5)].
Financial statement shall be signed on behalf of the Board by:
(a) Chairperson alone if authorised by the Board; or
(b) Two directors out of which one to be managing director and
CEO if he is a director; and
(c) CFO and company secretary wherever they are appointed.
In case of OPC, the financial statement may be signed only by one
director.
Depreciation (Schedule II)
Depreciation should be provided on an asset depending upon its
useful life and no separate rate of depreciation is prescribed in
the Act.
The tenure of useful life of the respective assets has been
prescribed in Schedule-II to the Act.
Reopening of Accounts on Courts or Tribunals Orders (Section 130)
A company shall not reopen its books of account and not recast its
financial statements, unless an order in this regard is made by a
court of competent jurisdiction or Tribunal to the effect that :
(i) the relevant earlier accounts were prepared in a fraudulent
manner; or
(ii) the affairs of the company were mis-managed during the
relevant period, casting a doubt on the reliability of financial
statements.
The Court or the Tribunal shall give notice to the central
government, the income tax authorities, SEBI or any other statutory
regulatory authority and shall take into consideration the
representation if any made by such regulatory authorities before
passing any order.
The revised or re-cast accounts shall be final.
Voluntary Revision of Financial Statements or Boards Report
(Section 131)
If it appears to the directors of a company that the companys
financial statement or the Boards report, are not in compliance
with the provisions of the Act, they may prepare revised financial
statement or a revised report in respect of any of the three
preceding financial years after obtaining approval of the Tribunal.
Such revised financial statement or report shall not be prepared or
filed more than once in a financial year.
The Tribunal shall give notice to the central government and income
tax authorities and consider representations, if any, made by them.
The detailed reasons for the revision of the financial statement or
report shall also be disclosed in the Boards report in the relevant
financial year in respect of which such revision is made.
National Financial Reporting Authority (NFRA)(Section 132)
NFRA, constituted by the Central Government, shall make
recommendations to the Central Government on accounting and auditing
standards. It shall monitor and enforce quality of service of chartered
accountants. It shall have powers of quasi-judicial for adjudication of such
professionals for misconduct. No other institute or body can initiate or
continue proceedings in such matters of misconduct in which NFRA has
initiated investigation.
Accounting Standards [Section 2(2) read with Section 133]
The Central Government may prescribe the accounting standards or
any addendum thereto, as recommended by the Institute of Chartered
Accountants of India, in consultation with and after examination of the
recommendations made by NFRA.
Boards Report etc. (Section 134)
The Board of directors in its report shall include:
i) extract of the annual return;
ii) number of meetings held of the Board;
iii) directors Responsibility Statement;
iv) a statement on declaration given by independent directors;
v) companys policy on directors appointment and remuneration
including criteria for determining qualifications, positive attributes,
independence of a director and other matters provided under sub-
section (3) of section 178;
vi) explanation or comments by the Board on every qualification,
reservation or adverse remark or disclaimer made by the auditor
in his report and by the Company Secretary in the secretarial audit
report;
vii) particulars of loans made, guarantees given or investments in
securities by the company;
viii) particulars of contracts or arrangements with related parties in a
prescribed form alongwith the justification for entering into such
contract or arrangement;
ix) the state of the companys affairs;

x) the amounts, if any, proposed to be carried to any reserves in
such balance sheet;
xi) the amount, if any, recommended to be paid by way of dividend;
xii) material changes and commitments, if any, affecting the financial
position of the company which have occurred between the end of
the financial year of the company to which the financial statements
relates and the date of the report;
xiii) the conservation of energy, technology absorption, foreign
exchange earnings and outgo, in such manner as prescribed;
xiv) a statement indicating development and implementation of a risk
management policy for the company including identification therein
of elements of risk, if any, which in the opinion of the Board may
threaten the existence of the company;
xv) the details about the policy developed and implemented by the
company on corporate social responsibility initiatives taken during
the year;
xvi) in case of a listed company and every other public companies
having a paid-up share capital of Rs.25 crore shall include in Boards
report, a statement indicating the manner in which formal annual
evaluation has been made by the Board of its own performance
and that of its own performance and that of its committees and
individual directors;
xvii) composition of CSR committee. If the company fails to spend the
amount designated for the CSR activities, the reasons for not
spending the amount (Section 135);
xviii) disclosure as to re-appointment of an independent director for a
second term of 5 years [Section 149(10)];
xix) in case of listed companies, the ratio of the remuneration of each
director to the median employees remuneration [Section 197(12)];
xx) detailed reasons for revision, if any, of the financial statement or
Boards report [Section 131(1) third proviso];
xxi) details of establishment of vigil mechanism for directors and
employees [Section 177(10)];
xxii) a separate section wherein a report on the performance and financial
position of each of the subsidiaries, associate and joint venture
companies;
xxiii) resignation of directors [Section 168(1)];
xxiv) any remuneration or commission received from any holding
company or subsidiary by a MD/WTD [Section 197(14)];
xxv) the composition of an audit committee and where the Board had
not accepted any recommendations of the audit committee, the
same shall be disclosed with reasons therefor;
xxvi) financial summary highlights;
xxvii) change in the nature of business, if any;
xxviii) details of directors or KMPs who were appointed or have resigned
during the year;
xxix) names of companies which have become or ceased to be
subsidiaries, joint ventures or associate companies during the year;
xxx) details relating to deposits covered under Chapter-V of the Act;
xxxi) details of significant and material orders passed by the Regulators
or Courts or Tribunals impacting the going concern status and
companys operations in future.
Directors Responsibility Statement [Section 134(3)(c) and (5)]
The Directors Responsibility Statement included in the Boards
report shall state that:
a) in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper
explanation relating to material departures;
b) the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that
are reasonable and prudent so as to give a true and fair view
of the state of affairs of the company at the end of the financial
year and of the profit and loss of the company for that period;
c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding the assets of
the company and for preventing and detecting the fraud and
other irregularities;
d) the directors had prepared the annual accounts on a going

concern basis;
e) *the directors, in the case of a listed company, had laid down

internal financial controls to be followed by the company and
that such internal controls are adequate and were operating
effectively; and
f) *the directors had devised proper systems to ensure compliance

with the provisions of all applicable laws and that such systems
were adequate and operating effectively.
* Items added in the Companies Act, 2013.
Corporate Social Responsibility (Section 135)

Every company having networth of Rs. 500 crore or more or
turnover of Rs.1000 crore or more or a net profit of rupees five
crore or more during any financial year shall constitute a Corporate
Social Responsibility (CSR) Committee consisting of three or more
directors, out of which at least one shall be an independent director.
An unlisted public company or a private company which is not
required to appoint an independent director under the provisions
of the Act, shall have its CSR Committee without such director.
The CSR Committee shall formulate and recommend to the Board
a corporate social responsibility policy and the expenditure to be
incurred on such activities.
The Board of such a company shall ensure that the company spends
in every financial year at least 2% of average net profits of a
company made during three immediately preceding financial years
in pursuance of its CSR policy. If a company fails to spend such
amount, the Board shall specify reasons for not spending the
amount in its report. The Boards report shall also disclose the
composition of the CSR Committee and the CSR Policy. The CSR
policy shall also be placed on the website of the company.
The company shall give preference to local areas where it operates,
for spending the amount earmarked for CSR activities.
Internal Audit (Section 138)
Following class of companies should appoint an internal auditor or
a firm of internal auditors:
(a) every listed company;
(b) every unlisted public company having paid-up capital of Rs. 50
crore or more;
(c) every unlisted public company having turnover of Rs. 200 crore
or more or outstanding borrowings from banks, public financial
institutions exceeding Rs.100 crore or outstanding deposits of
Rs. 25 crore or more; and
(d) every private company having turnover of Rs.200 crore or
more or outstanding loans and borrowings from banks or public
financial institutions exceeding Rs.100 crore or more.
The internal auditor may or may not be an employee of the
company.
The companies covered under any of the prescribed criteria shall
comply with the requirement of this section by September 30,
2014.
Chapter X
AUDIT AND AUDITORS
Appointment of Auditors Financial Audit

An auditor appointed by a company at the first annual general
meeting shall hold office from the conclusion of that meeting till
the conclusion of the sixth annual general meeting. The company
shall place the matter relating to such appointment for ratification
by members at every annual general meeting [Section 139(1)].
No listed company or (a) unlisted public company with paid-up
capital of Rs.10 crore or more; (b) all private companies with paid
up capital of Rs.20 crore or more; and (c) all companies having
public borrowings from financial institutions, banks or public deposits
of Rs.50 crore or more (excluding one person company and small
company) shall appoint or reappoint an individual as auditor for
more than one term of five consecutive years or an audit firm as
auditors for more than two terms of five consecutive years. The
said individual or audit firm shall be eligible for reappointment as
auditor in the same company after a lapse of five years from the
completion of such term. The period for which he or it has been
holding office as auditor prior to April 1, 2014 shall be taken into
account in calculating the period of five consecutive years or ten
consecutive years, as the case may be [Section 139(2)].
Every company shall comply with the said requirements within
three years from April 1, 2014 [Section 139(2) second proviso].
The incoming auditor or audit firm shall not be eligible if such
auditor or audit firm is associated with the outgoing auditor or
audit firm under the same net work of audit firms.
The members of the company may resolve that (a) in the audit
firm appointed by it, the auditing partner and his team shall be
rotated every year; and (b) the audit shall be conducted by more
than one auditor [Section 139(3)].
Where at any annual general meeting, no auditor is appointed or
re-appointed, the existing auditor shall continue to be the auditor
of the company.
Audit committee should recommend appointment of auditors
including casual vacancy.
35
Resignation / Removal of Auditors

Auditor resigning from a company should file within 30 days a
statement in prescribed form with the company and Registrar of
Companies stating reasons and facts for resigning [Section 140(2)].
A company should pass a special resolution with prior approval of
the Central Government for removing its auditors before expiry of
his term [Section 140(1)].
Tribunal may suo moto on reference by central government /
application by any person concerned direct the company to change
auditors, if the auditor has acted fraudulently.
Auditors Report (Section 143)
Auditors report shall state certain additional matters to the
shareholders, namely:
(a) whether he has sought and obtained all information and

explanations for the purpose of audit and if not details thereof
and effect thereof on financial statements;
(b) the observations / comments of the auditors on financial

transactions or matters which have adverse effect on the
functioning of the company;
(c) whether the company has adequate internal financial controls

system in place and the operating effectiveness of such control;
(d) whether the company has disclosed the impact, if any, of

pending litigations;
(e) whether the company has made provisions, as required under

any law or accounting standards for material foreseeable losses,
if any, on long term contracts including derivative contracts;
(f) whether there has been any delay in transferring amounts,

required to be transferred to the Investor Education and
Protection Fund by the company.
Unqualified auditors report need not be read out at the annual
general meeting.
Reporting of Frauds by Auditors
In case, the auditor including the cost auditor and secretarial auditor,
in the course of performance of his duties, has sufficient reason to believe
that an offence involving fraud, is being or has been committed against
the company by officers or employees of the company, he shall report the
matter to the central government immediately. The auditor shall forward
his report to the Board or the audit committee, as the case may be seeking
its comments / explanation.
Auditors not to Render certain Services (Section 144)
Following services shall not be rendered to the company, its holding
company or subsidiary company by the auditors, namely:
(a) Accounting and book keeping services;
(b) Internal audit;
(c) Design and implementation of any financial information system;
(d) Actuarial services;
(e) Investment advisor / investment banking services;
(f) Rendering of outsourced financial services;
(g) Management services.
Cost Audit (Section 148)
The Board of directors of a company can appoint cost auditors wherever
conduct of cost audit is mandatory. The remuneration of cost auditors
shall be considered and approved by the Board of Directors and ratified
subsequently by the shareholders.
Chapter XI
APPOINTMENT AND QUALIFICATIONS OF DIRECTOR
Board of Directors
Minimum two directors in a private company, three directors in a
public company and one director in a OPC are required.
A company can have a maximum of 15 directors. It may appoint
more than 15 directors after passing a special resolution [Section
149(1)(b) and first proviso].
Every listed company and other public companies having a paid up
share capital of Rs.10 crore or more or public company having a
turnover of Rs.100 crore or more or public companies having
outstanding loans or borrowings exceeding Rs.50 crore to have at
least 1/3rd of the total number of directors and not less than two
directors as independent directors by March 31, 2015
[Section 149(4) read with Rule 4 of the Companies (Appointment
and Qualifications of Directors) Rules, 2014]. Any intermittent
vacancy of an independent director should be filled up at the next
Board meeting or three months from the date of such vacancy,
whichever is later.
Every listed company and every other public company having a
paid up share capital of Rs.100 crore or more or turnover of Rs.300
crore or more shall appoint, by March 31, 2015, at least one woman
director who need not be an independent director. Companies
incorporated under the Act and required to appoint a woman director
shall appoint at least one woman director within six months from
the date of its incorporation [Section 149(1) read with Rule 3 of
the Companies (Appointment and Qualifications of Director) Rules,
2014]. Any intermittent vacancy of a woman director shall be
filled up by the Board at the earliest but not later than immediate
next Board meeting or three months from the date of such vacancy,
whichever is later.
Note: A listed public company, whose shares are listed on a stock
exchange should appoint requisite number of independent directors
and woman director by September 30, 2014 as per clause 49 of
the Listing Agreement with Stock Exchanges.
All companies including private companies, effective April 1, 2014,
38
must have at least one director who has stayed in India for a
minimum period of 182 days during the previous calendar year.
Therefore, on a proportionate basis, the number of days for which
the director(s) would need to be resident in India, during calendar
year 2014 should exceed 136 days. Newly incorporated companies
after 1st April 2014 should have the resident director from the
date of incorporation for complying with the new requirements.
Independent Director
Independent director has been defined exhaustively under
Section 149(6). Every independent director shall at the first meeting
of the Board in which he participates as a director and thereafter
at the first meeting of the Board in every financial year give a
declaration that he meets with the criteria for independence as
provided in the section [Section 149(7)].
An independent director shall not be entitled to any remuneration
other than sitting fee, reimbursement of expenses for participating
in the Board and other meetings and profit related commission as
may be approved by the members [Section 149(9)].
An independent director shall hold office for a term upto 5
consecutive years on the Board but shall be eligible for
reappointment for another 5 years on passing a special resolution
by the company [Section 149(10)].
No independent director shall hold office for more than two
consecutive terms but shall be eligible for appointment after
expiration of three years on ceasing to be an independent director.
The independent director shall not, during the said three years be
appointed in or associated with the company in any other capacity
[Section 149(11)].
Any tenure of an independent director as on April 1, 2014, shall
not be counted as a term for the purposes of this requirement
[Section 149(11) explanation].
Independent director is not liable to retire by rotation. He should
be excluded while computing directors retiring by rotation in every
annual general meeting.
Nominee director appointed by any financial institution or pursuant
to any agreement or appointed by the government to represent
its shareholding shall not be deemed to be an independent director
[Section 149(7) explanation].
The independent directors shall abide by the code set out in
accordance with Schedule-IV to the Act.
The appointment of independent directors under the Act would
need to be formalized through a letter of appointment.
As per clause 49 of the listing agreement, a person who has already

served as an independent director for five years or more in a
company as on 1st October 2014, he shall be eligible for
appointment on completion of his present term, for one more
term upto five years only.
Appointment of Director by Small Shareholders (Section 151)
A listed company may have one director elected by small
shareholders (that is shareholders holding shares of nominal value
of not more than Rs. 20,000).
A listed company may opt to have a director representing small
shareholders suo moto. The small shareholder director is not liable
to retire by rotation, cannot hold office for more than three
consecutive years, shall meet with the criteria of independence
under section 149(6) of the Act and shall not hold position as
small shareholder director in more than two companies at the
same time.
Additional / Alternate Director / Director in Casual Vacancy
Board cannot appoint a person as additional director who fails to
get elected in a general meeting [Section 161(1)]. Additional
director appointed by the Board shall hold office upto the date of
the next annual general meeting.
Alternate director for a director cannot act as alternate director
for another director [Section 161(2)].
Alternate director for an independent director should be qualified
for appointment as an independent director[Section 161(2)
proviso].
In the case of a public company, if the office of any director
appointed by the company in general meeting is vacated before
his term of office expires in the normal course, the resulting casual
vacancy may be filled by the board at a meeting of the Board of
directors.
Number of Directorship (Section 165)
No person shall hold office as a director including any alternate
directorship in more than 20 companies (including private
companies and section 8 companies) at the same time and he
shall not be appointed as director in more than ten public
companies. Directorship in companies incorporated outside India
to be excluded from the above limit [Section 165(1)]. As per
clause 49 of the Listing Agreement, a person shall not serve as an
independent director in more than seven listed companies.Further,
any person who is serving as a whole time director in any listed
company shall serve as an independent director in not more than
three listed companies.
The members may by a special resolution specify any lesser number
of companies beyond which a director of the company shall not
act as director [Section 165(2)].
No person shall act as director in more than the specified number
of companies after March 31, 2015 and shall intimate each of the
companies and Registrar having jurisdiction in respect of each such
company about his resignation as a director in the companies
[Section 165(3)].
Resignation of a director for compliance with the limits stipulated
in the Act, is effective immediately on despatch of letter of
resignation.
Duties of Directors (Section 166)
The Act provides for various duties of directors, namely:
(a) A director of a company shall act in accordance with the
companys articles.
(b) A director of a company shall act in good faith in order to
promote the objects of the company for the benefit of its
members as a whole and in the best interests of the company,
its employees, the shareholders, the community and the
environment.
(c) A director of a company shall exercise his duties with due and
reasonable care, skill and diligence and shall exercise
independent judgement.
(d) A director of a company shall not involve in a situation in
which he may have a direct or indirect interest that conflicts
or possibly may conflict, with the interest of the company.
(e) A director of a company shall not achieve or attempt to achieve
any undue gain or advantage either to himself or his relatives,
partners or associates.
(f) A director of a company shall not assign his office and any
assignment so made shall be void.
Resignation of Director (Section 168)
The Board of directors shall take note of the resignation of a director
and intimate the Registrar and report in the Boards report and
also post the information on its website, if any.
The director resigning shall also forward a copy of his resignation
along with detailed reasons for the resignation to the Registrar.
The resignation of a director shall take effect from the date on
which the notice is received by the company or the date if any
specified by the director in the notice, whichever is later.
Removal of Director (Section 169)

Special notice shall be required of any resolution to remove a director
or appoint somebody in place of a director so removed. Special notice to
remove a director shall be given by members having not less than 1% of
the total voting power or holding shares on which an aggregate sum of not
less than Rs. 5 lakhs has been paid up on the date of the notice.
Register to be kept open at Annual General Meeting
Register of directors and key managerial personnel and their
shareholding maintained under section 170 and register of contracts or
arrangements in which directors are interested maintained under section
189 shall be kept open for inspection at annual general meeting of the
company and shall be made accessible to any person attending the meeting.
Chapter XII
MEETINGS OF BOARD AND ITS POWERS
Meetings of Board (Section 173)

Minimum four board meetings shall be held every year, with a gap
of not more than one hundred twenty days between two
consecutive meetings [Section 173(1)].
Participation in meetings through video conferencing or other audio
visual means is permissible and such participation shall be counted
for the purpose of quorum [Section 173(2)]. Approval of annual
financial statements, boards report, approval of prospectus and
approval of matters relating to amalgamation, merger, demerger,
acquisition and takeover shall not be dealt with through video
conferencing or other audio visual means.
Notice of not less than seven days to be given for each board
meeting [Section 173(3)].
Meeting may be called at shorter notice provided at least one
independent director is present at the meeting [Section 173(3)
proviso]. In case of absence of independent directors from such a
meeting, decisions taken at such a meeting shall be circulated to
the directors and shall be final only on ratification thereof by at
least one independent director, if any.
OPC, small company and a dormant company to hold at least one
Board meeting in each half of calendar year with a gap of not less
than ninety days between the two meetings [Section 173(5)].
Quorum for meetings of Board (Section 174)
The quorum for a meeting of the Board of directors of a company

shall be one-third of its total strength or two directors, whichever
is higher and the participation of the directors by video conferencing
or by other audio visual means shall also be counted for the purpose
of quorum for meetings of the Board. Following matters shall not
be dealt with in any meeting held through Video Conferencing or
other audio visual means:
(a) the approval of the annual financial statements (b) the approval of
the Boards report (c) the approval of the Prospectus (d) the Audit
Committee meetings for consideration of accounts and (e) the
43
approval of the matter relating to amalgamation, merger, demerger,

acquisition and takeover.
Resolution by Circulation (Section 175)
Where not less than one-third of the Board requires that any
resolution proposed to be passed by circulation should be decided
at a meeting, the Chairman shall put the resolution to be decided
at a meeting of the Board. The resolution by circulation should be
noted at a subsequent meeting of the Board or the committee
thereof and made part of the minutes of such meeting.
Audit Committee (Section 177)
The Board of directors of every listed company and every other
public company having paid-up capital of Rs. 10 crore or more, or
turnover of Rs.100 crore or more or having in aggregate outstanding
loans or borrowings or debentures or deposits exceeding Rs. 50
crore or more shall constitute an audit committee.
The audit committee shall consist of a minimum of three directors
with independent directors forming majority. The audit committee
of a company shall be constituted by March 31, 2015.
Every audit committee shall act in accordance with the terms of
reference specified in writing by the Board which shall inter alia
include:
(i) The recommendation for appointment, remuneration and terms
of appointment of auditors of the company;
(ii) Review and monitor the auditor s independence and
performance, and effectiveness of audit process;
(iii) Examination of the financial statement and the auditors report
thereon;
(iv) Approval or any subsequent modification of transactions of
the company with related parties;
(v) Scrutiny of inter-corporate loans and investments;
(vi) Valuation of undertakings or assets of the company, wherever
it is necessary;
(vii) Evaluation of internal financial controls and risk management
systems;
(viii) Monitoring the end use of funds raised through public offers
and related matters.
Note : Public companies whose shares are listed should
also adhere to the requirements set out under Clause
49 of the Listing Agreement.
Vigil Mechanism
Every listed company and other companies which accept deposits

from public, the companies which have borrowed monies from
banks and public financial institutions in excess of Rs.50 crore
shall establish a vigil mechanism for directors and employees to
report genuine concerns.
Details of such mechanism should be disclosed on companys
website and Boards report.
The vigil mechanism to provide for adequate safeguards against
victimisation of persons who use such mechanism and for direct
access to the chairperson of the Audit Committee in appropriate
or exceptional cases [Section 177(9) and (10)].
Nomination and Remuneration Committee (Section 178)
Every listed company and every public company having a paid up
share capital of Rs.10 crore or more, turnover of Rs.100 crore or
more or having in aggregate outstanding loans or borrowings or
debentures or deposits exceeding Rs.50 crore or more, to constitute
Nomination and Remuneration Committee comprising three or more
non-executive directors out of which not less than one-half should
be independent directors.
Terms of reference and duties of the said Committee include:
(a) To identify persons who are qualified to become directors or
who may be appointed in senior management, recommend to
the Board their appointment and removal and shall carry out
evaluation of every directors performance;
(b) to formulate the criteria for determining qualifications, positive
attributes and independence of a director;
(c) to recommend to the board a policy relating to the remuneration
for the directors, key managerial personnel and other
employees.
Stakeholders Relationship Committee [Section 178]
A company having more than one thousand shareholders, debenture-
holders, deposit-holders and any other security holders at any time during
a financial year shall constitute a Stakeholders Relationship committee and
the chairperson of the said committee shall be a non-executive director.
The Stakeholder Relationship committee shall consider and resolve the
grievances of security holders of the company.
Powers of the Board (Section 179)
The Board shall exercise the following powers by means of
resolutions passed only at its meetings:
(a) To make calls on shareholders in respect of money unpaid on
their shares
(b) To authorise buy-back of securities.
(c) To issue securities including debentures, whether in India or
outside India
(d) To borrow monies*
(e) To invest the funds of the company*
(f) To grant loans or give guarantee or provide security in respect

of loans*
(g) To approve financial statement and Boards report
(h) To diversify the business of the Company
(i) To approve amalgamation, merger or reconstruction
(j) To takeover a company or acquire a controlling or substantial
stake in another company
(k) To make political contributions
(l) To appoint or remove KMP
(m) To take note of appointments or removals of any one below
KMP
(n) To appoint Internal Auditors and Secretarial Auditors
(o) To adopt Common Seal
(p) To take note of the disclosure of Directors interest and
shareholding
(q) To buy, sell investments held by the company (other than trade
investments) constituting 5% or more of the paid-up share
capital and free reserves of the investee company
(r) To invite or accept or renew public deposits and related matters
(s) To review or change the terms and conditions of public deposits
(t) To approve quarterly, half-yearly and annual financial
statements of financial results
(u) To fill casual vacancy in the Board [Section 161(4)]
(v) To enter into contract(s) with related parties (Section 188)
(w) To appoint MD / WTD / Manager (Section 203)
* Board may delegate to any committee of directors, managing director,
manager or any other principal officer of the company.
Restrictions on Powers of Board (Section (180)
The Board of directors of a company shall exercise the following powers

only with the consent of the members by a special resolution, namely:
(a) to sell, lease or otherwise dispose of the whole or substantially
the whole of the undertaking of the company;
(b) to invest otherwise in trust securities the amount of compensation
received by a company as a result of merger or amalgamation.
(c) to borrow money in excess of its paid-up share capital and free
reserves;
(d) to remit or give time for repayment of any debt due from a director.
Note: The expressions undertaking and substantially the whole
of the undertaking have been defined in section 180 of the Act.
Loans to Directors etc. (Section 185)
No company shall, directly or indirectly, advance any loan to any
of its directors (except MD / WTD) or to any person in whom the
director is interested. The members of the company should approve
by passing a special resolution for giving any loan to MD / WTD
and it is part of his service conditions.
Loan transactions between private companies which have a
common director or where a director of one company is a member
of the other are not permitted.
Providing loans in the ordinary course of business of the company
is allowed and interest on the loan should not be less than the
bank rate.
The Rules under the Act permit the following:
(a) A holding company may give loan or guarantee or provide

security in connection with a loan to its wholly owned subsidiary
company.
(b) A holding company may give guarantee or provide security in

respect of loan made by any bank or financial institution to its
subsidiary where loans so obtained are exclusively utilized by
the subsidiary for its principal business activities.
Loans and Investment by Company (Section 186)
A company can, unless otherwise prescribed, make investment

through not more than two layers of investment companies.
No company shall directly or indirectly give any loan to any person

or body corporate, give any guarantee or provide security in
connection with a loan to any other body corporate or person and
acquire securities of any body corporate in excess of 60% of its
paid-up share capital, free reserves and securities premium or
100% of its free reserves and securities premium whichever is
more. Proposals in excess of the aforesaid limits require prior
approval of shareholders by passing a special resolution except in
case of loan / guarantee / security by a company to its wholly
owned subsidiary or a joint venture company and acquisition of
securities by a holding company of its wholly owned subsidiary.
Proposals within the aforesaid limits can be sanctioned by the
Board of directors with the consent of all directors present at the
meeting.
The company to disclose in the financial statements full particulars
of loans given, investment made or guarantee given or security
provided and the purpose for which the loan / guarantee / security
to be utilised by the recipient.
Rate of interest on the loans shall not be lower than the prevailing
yield of one year, three year, five year or ten year government
security closest to the tenor of the loan.
Separate carve-outs are provided for exempting the companies

(a) for the purpose of giving loans/guarantees/securities and
(b) for the purpose of investment in securities.
Investments of company to be held in its own name (Section 187)
All investments made or held by a company in any property, security

or other asset shall be made and held by it in its own name;
provided that the company may hold any shares in its subsidiary
company in the name of any nominees, if it is necessary to do so,
to ensure that the number of members of the subsidiary company
is not reduced below the statutory limit.
Nothing in this section shall be deemed to prevent a company

from holding investments in the name of a depository when such
investments are in the form of securities held by the company as
a beneficial owner. In such cases, the company shall maintain a
register containing such particulars as prescribed.
Related Party Transactions (Section 188)
Related party transactions are to be approved by a resolution passed
at a meeting of the Board.
Where any director is interested in any contract or arrangement
with a related party, such director shall not be present at the
meeting during discussions on the subject matter of the resolution
relating to such contract or arrangement.
Except with the prior approval of the company by a special
resolution:
(i) a company having a paid-up share capital of ten crore rupees
or more shall not enter into a contract or arrangement with
any related party; or
(ii) a company shall not enter into a transaction or transactions,
where the transaction or transactions to be entered into:
(a) as contracts or arrangements with respect to clauses (a)
to (e) of sub-section (1) of section 188 with criteria, as
mentioned below:
(i) sale, purchase or supply of any goods or materials
directly or through appointment of agents, exceeding
twenty five percent of the annual turnover as
mentioned in clause (a) and clause (e) respectively of
sub-section(1) of section 188;
(ii) selling or otherwise disposing of, or buying property
of any kind directly or through appointment of agents
exceeding ten percent, of net worth as mentioned in
clause (b) and clause (e) respectively of sub-
section (1) of section 188;
(iii) leasing of property of any kind exceeding ten percent
of the net worth or exceeding ten percent of turnover
as mentioned in clause (c) of sub-section (1) of
section 188;
(iv) availing or tendering of any service directly or through
appointment of agents exceeding ten percent of the
net worth as mentioned in clause (d) and clause (e)
of sub-section (1) of section 188.
(b) appointment to any office or place of profit in the company,
its subsidiary company or associate company at a monthly
remuneration exceeding two and half lakh rupees as
mentioned in clause (f) of sub-section (1) of section 188;
or
(c) remuneration for underwriting the subscription of any
securities or derivatives thereof of the company exceeding
one percent of the net worth as mentioned in clause (g)
of sub-section (1) of section 188.
Member who is a related party cannot to vote on such special

resolution.
In case of related party transactions between a holding company

and its wholly owned subsidiary, the special resolution would be
required to be passed by the shareholders of the holding company.
However, the aforesaid provisions shall not apply to transactions

entered into by a company in its ordinary course of business other
than transactions which are not on arms length basis.
Note:
(1) A listed company whose shares are listed on a stock exchange

should comply with the conditions stipulated under clause 49
of the Listing Agreement.
(2) MCA has clarified that transactions arising out of compromises,

arrangements and amalgamations dealt with under specific
provisions of the Companies Act, 1956 / Companies Act, 2013,
will not attract the requirements of section 188 of the 2013
Act.
(3) Contracts entered into by companies, after making necessary

compliances under section 297 of the Companies Act, 1956
which already came into effect before commencement of
section 188 of the 2013 Act, will not require fresh approval
under section 188 till the expiry of the original term of such
contracts if there is no modification in such contracts on or
after April 1, 2014.
Contract of employment with managing and whole-time directors
(Section 190)
Every company shall keep at its registered office, a copy of the
contract of service with its managing / whole-time director or a
written memorandum setting out its terms.
The copies of the contract or the memorandum shall be open to
inspection by any member of the company.
Restriction on Non-cash Transactions involving Directors
(Section 192)
Non-cash transactions or arrangement involving directors of the
company or its holding, subsidiary or associate company will require prior
approval of the company in general meeting value of assets to be calculated
by registered valuer.
Prohibition on Forward Dealings (Section 194)
No director or key managerial personnel can do forward dealings
in securities of the company, its holding, subsidiary or associate
company.
If the director or KMP contravenes this stipulation, he shall be
punishable with imprisonment upto 2 years or fine upto five lakh
rupees or with both.
If a director or KMP acquires any securities in contravention of
this section, he shall be liable to surrender the securities to the
company; in case securities are in demat form, the company should
inform the Depository not to record such acquisition and the
securities will continue to remain in the names of the transferors.
Prohibition of Insider Trading of Securities (Section 195)
No person including any director or key managerial personnel of a
company shall enter into insider trading.
If any person contravenes the provisions, the person concerned
shall be punishable with imprisonment extending to five years or
fine up to Rs. 25 crore or three times the amount of profit made
out of insider trading, whichever is higher or with both.
Chapter XIII
APPOINTMENT AND REMUNERATION OF

MANAGERIAL PERSONNEL
Appointment of Managing Director, Whole-time Director or

Manager (Section 196)
Appointment or re-appointment of managing director (MD) or
whole-time director (WTD) or manager shall be for a term not
exceeding five years at a time [Section 196(2)]. The re-appointment
cannot be earlier than one year before expiry of the present term.
A person below twenty-one years of age cannot be appointed as
a managerial personnel. The appointment or continuation as
managerial personnel of a person above seventy years of age
shall require approval of the company by a special resolution
[Section 196(3)].
Appointment and remuneration payable to MD / WTD / Manager
requires Board of directors approval at a meeting and approval of
shareholders by passing an ordinary resolution (unless the articles
provide for a special resolution) at the next general meeting.
Section 197 of the Act read with schedule V provides the terms
and conditions of appointment and remuneration of managerial
personnel
Central Government approval will be required if the company is
having inadequate or no profits and the appointment and
remuneration payable are at variance with the conditions specified
in Schedule V of the Act [Section 196(4)].
Managerial Remuneration (Section 197)
Total remuneration payable by a public company to its directors
including MD / WTD / Manager in any financial year not to exceed
11% of its net profits. The remuneration to directors in excess of
11% can be paid with the approval of central government.
Sitting fee payable to a director shall not exceed rupees one lakh
per meeting of the Board or committee thereof [Section 197(5)
read with Rule 4 of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014]. Sitting fee payable to
independent directors and woman director shall not be less than
the sitting fee payable to other directors.
51
Independent director shall not be entitled to any stock option and

may receive remuneration only by way of commission on net profits
of the company or fees for attending meetings of the Board or
committee thereof [Section 197(7)].
Premium paid for any insurance taken by a company to indemnify
key managerial personnel against any liability in relation to the
company, shall not be treated as part of the remuneration payable
to such personnel, so long as such person is not proved guilty
[Section 197(13)].
A managing director or whole-time director who is receiving
commission from a company, may receive remuneration or
commission from any holding company or subsidiary company
of such company subject to disclosure in Boards report
[Section 197(14)].
The company to recover from past and present MD / WTD /
Manager or CEO excess remuneration paid (including stock option),
if any, consequent to re-statement of financial statements due to
fraud or non-compliance with any requirement under the Act.
Appointment of Key Managerial Personnel (Section 203)
Every listed company and every other public company having a
paid up share capital of Rs. 10 crore or more shall have a whole-
time:
i) managing director or chief executive officer or manager and
in their absence, a whole-time director;
ii) *company secretary; and
iii) chief financial officer
Unless the articles of a company provide otherwise, an individual
shall not be the chairperson as well as the managing director or
chief executive officer of the company at the same time. This
requirement shall not apply to a company which is not carrying on
multiple business. The condition that an individual shall not be
appointed or reappointed as the chairperson of the company as
well as the managing director or chief executive of the company,
at the same time shall not apply to public companies having paid
up share capital of rupees one hundred crore or more and annual
turnover of rupees one thousand crore or more which are engaged
in multiple businesses and have appointed chief executive officer
(who need not be a member of the Board) for each such business.
A whole-time key managerial personnel shall not hold office in
* Public company having a paid-up share capital of five crore rupees or

more shall have a whole time Company Secretary.
more than one company except in its subsidiary company at the
same time. However, a whole-time key managerial personnel can
be a director simplicitor of any company with the permission of
the Board [Section 203(3)].
A whole-time key managerial personnel holding office in more
than one company at the same time on April 1, 2014, shall on or
before September 30, 2014, choose one company, in which he
wishes to continue to hold the office of key managerial personnel.
However, managing director/manager of a company may be
appointed as managing director of not more than one other
company with the unanimous board approval of the company
appointing him as managing director as also consent of the
Board of the company in which he is already a managing director
[Section 203(3)].
Any vacancy in the office of a whole-time key managerial personnel
shall be filled by the Board at a meeting of the Board within six
months from the date of such vacancy [Section 203(4)].
Secretarial Audit (Section 204)
Every listed company and every public company having a paid up
share capital of Rs. 50 crore or more or every public company
having a turnover of Rs. 250 crore or more shall annex with Boards
report, secretarial audit report given by a company secretary in
practice.
The Board of directors, in its report, shall explain in full any
qualification or observation or other remarks made in the secretarial
audit report.
Functions of the Company Secretary (Section 205)
The Act provides functions of company secretary namely:
to report to the Board about compliance with the provisions of the
Act, Rules made thereunder and other laws applicable to the
company.
to comply with applicable secretarial standards.
to provide to the directors of the company, collectively and
individually, such guidance as they may require, with regard to
their duties, responsibilities and powers.
to facilitate the convening of meetings and attend Board,
committee and general meetings and maintain the minutes of
these meetings.
to obtain approvals from the Board, general meetings, the
government and such other authorities as required under the
provisions of the Act.
to represent before various regulators and other authorities under

the Act in connection with discharge of various functions under
the Act.
to assist the Board in the conduct of the affairs of the company.
to assist and advise the Board in ensuring good corporate

governance and in complying with the corporate governance
requirements and best practices;
to discharge such other duties as have been specified under the
Act or Rules.
such other duties as may be assigned by the Board from time to
time.
Chapter XIV
INSPECTION, INQUIRY AND INVESTIGATION
Inspection (Section 206)

The Central Government may direct Registrar of Companies to
carry out inquiry upon representation received that the business
of a company is carried on for unlawful / fraudulent purpose.
The Central Government may by an order authorise any statutory
authority to carry out inspection of books of account of a company.
Search and Seizure (Section 209)
Registrar or inspector after obtaining an order from Special Court
may search and seize the books and papers of a company or those
relating to the KMPs or any director or auditor or company secretary
in practice.
Investigation (Section 210)
The Central Government may order an investigation into the affairs
of a company in public interest.
Serious Fraud Investigation Office (SFIO)
The Central Government shall establish SFIO office to investigate
frauds relating to a company [Section 211(1)]. It may order an
investigation by SFIO on request from any department of the
Central Government / State Government [Section 212(1)].
No other investigating agency of the Central Government or State
Government shall proceed with investigation for any offence under
the Companies Act, where any case has been assigned by Central
Government to SFIO for investigation [Section 212(2)].
SFIO and any investigating agency, state government, police or
income tax authority shall share the information or documents
available amongst themselves [Section 212(17)].
Protection of Employees during Investigation (Section 218)
If any company proposes to punish any employee or discharge any
employee or change the terms of employment to the disadvantage
of any employee during the course of investigation, it shall obtain
approval of the Tribunal of the action proposed.
55
Freezing of assets of the Company on Inquiry and Investigation

(Section 221)
The Tribunal may by order freeze the removal or transfer or disposal
of funds, assets and properties of the company if it is required in
the interest of the company, shareholders, creditors or in public
interest; stringent punishment is provided in the Act if the company
or any officer of the company defaults in compliance with this
requirement.
General
If fraud has taken place in a company, the Central Government
may seek order of Tribunal for disgorgement of assets, property
or cash and for holding such directors, KMPs, Officers personally
liable without any limitation [Section 224(5)]
Investigation initiated shall not be stopped or suspended even
where winding up is approved by shareholders or any proceeding
for winding up is pending before Tribunal (Section 226)
If during the course of inspection or investigation, the person
providing explanation or making statement or an officer or
employee of a company or other body corporate who is also under
investigation:
(a) destroys, falsifies, hampers, conceals documents relating to
properties, assets and affairs of the company
(b) makes false entry in any document concerning the company
(c) provides explanation which is false (Section 229)
such person shall be liable for action under Section 447.
Chapter XV
COMPROMISES, ARRANGEMENTS AND

AMALGAMATION
Compromise or arrangements with creditors and members

(Section 230)
Application for compromise or arrangement between company
and its creditors and company and its members shall be made to
the Tribunal [Section 230(1)].
Scheme for corporate debt restructuring would require consent of
not less than seventy-five per cent of the secured creditors in
value [Section 230(2)(c)].
A statement disclosing the details of the compromise or
arrangement, a copy of the Valuation report by registered valuers
and such other matters, as may be prescribed shall be sent to all
members or creditors along with the notice calling meeting of
members or creditors [Section 230(3)].
The notice and other documents shall also be placed on the website
of the company and in case of a listed company, these documents
shall also be sent to SEBI and stock exchange for placing on their
website [Section 230(3) proviso].
Notice to provide that members / creditors may vote at the meeting
or through postal ballot to be received within one month from
the date of receipt of such notice for adoption of the compromise
or arrangement [Section 230(4)].
Any objection to a compromise or arrangement shall be made
only by persons holding not less than ten per cent of the
shareholding or having outstanding debt amounting to not less
than five per cent of the total outstanding debt as per the latest
audited financial statement [Section 230(4) proviso].
Notice shall also be sent to other regulatory authorities such as
Central Government, the income-tax authorities, Reserve Bank
of India, Securities Exchange Board of India, Registrar of
Companies, Stock exchanges, Competition Commission of India
requiring them to make representations, if any, within thirty days
from the date of receipt of such notice failing which, it shall be
presumed that they have no representation to make on the
proposals [Section 230(5)].
57
Where a scheme is sought to be approved at a meeting, it shall

require approval of majority of persons representing three-
fourths in value of creditors or members, as the case may be
[Section 230(6)].
No compromise or arrangement shall be sanctioned by the Tribunal
unless a certificate by the companys auditor has been filed with
the Tribunal to the effect that the accounting treatment, if any,
proposed in the Scheme is in conformity with the accounting
standards [Section 230(7) proviso].
Tribunal may dispense with calling of a meeting of creditors where
such creditors having at least 90% value, agree and confirm, by
way of affidavit, to the scheme of compromise or arrangement.
Any compromise or arrangement may include takeover offer and
in the case of listed companies, takeover offer shall be as per
Regulations framed by SEBI [Section 230(11)].
Merger and Amalgamation of Companies (Section 232)
Provisions of section 230 shall apply, mutatis mutandis where an
application is made to the Tribunal in connection with a scheme
involving merger or amalgamation of any two or more companies.
The transferee company shall not, as a result of the compromise
or arrangement, hold any shares in its own name or in the name of
any trust whether on its behalf or on behalf of any of its subsidiary
or associate companies and any such shares shall be cancelled or
extinguished. In other words no treasury shares are permitted
[Section 232(3) proviso].
Where the transferor company is a listed company and the
transferee company is an unlisted company, the transferee company
shall remain an unlisted company until it becomes a listed company.
The shareholders who opt out may be paid as per valuation specified
by SEBI under any regulation framed by it [Section 232(3)(h)].
Every company shall until the completion of the scheme, file a
statement in such form and within such time as may be prescribed
with the Registrar every year duly certified by a Chartered
Accountant or a Cost Accountant or a Company Secretary in Practice
indicating whether the scheme is being complied with in accordance
with the orders of the Tribunal or not.
Merger or Amalgamation of certain Companies (Section 233)
Separate provisions have been prescribed in the Act for merger of
two or more small companies or merger of wholly owned
subsidiaries with holding companies or such other companies as
may be prescribed. In these cases, the Central Government shall
approve the merger instead of the Tribunal if there is no objections
to the scheme of merger.
If the Central Government is of the opinion that the scheme is not
in public interest or in the interest of creditors, it may file an
application before the Tribunal within a period of 60 days of the
receipt of the scheme, stating its objections and requesting that
the Tribunal may consider the scheme under section 232.
Merger or amalgamation of company with foreign company
(Section 234)
The Act permits cross border mergers subject to adherence to the
rules framed for this purpose (Section 234).
Purchase of minority shareholding (Section 236)
New provisions enacted for purchase of minority shareholding
(Section 236).
Liability of officers for offences committed prior to merger
(Section 240)
Liability in respect of offences committed under the Act by the
officers who are in default of the transferor company prior to its
merger, amalgamation or acquisition shall continue after such
merger or amalgamation or acquisiton (Section 240).
Chapter XVI
PREVENTION OF OPPRESSION AND MISMANAGEMENT
Class Action (Section 245)

Prescribed number of members or depositors or any class of them
may file an application before the Tribunal on behalf of the members
or depositors, if they are of the opinion that the management or
conduct of affairs of the company are being conducted in a manner
prejudicial to the interests of the company or its members or
depositors.
Members or depositors can seek all or any of the following orders,
viz.
a) To restrain the company from committing an act which is ultra
vires the articles or memorandum of the company.
b) To restrain the company from committing breach of any
provision of the companys memorandum or articles.
c) To declare a resolution altering the memorandum or articles
of the company as void if the resolution was passed by
suppression of material facts or obtained by mis-statement to
the members or depositors.
d) To restrain the company and its directors from acting on such
resolution.
e) To restrain the company from doing an act which is contrary
to the provisions of this Act or any other law for the time
being in force.
f) To restrain the company from taking action contrary to any
resolution passed by the members.
g) To claim damages or compensation or demand any other suitable
action from or against :
(i) The company or its directors for any fraudulent, unlawful
or wrongful act or omission or conduct or any likely act or
omission or conduct on its or their part;
(ii) The auditor including audit firm of the company for any
improper or misleading statement of particulars made in
60
his audit report or for any fraudulent, unlawful or wrongful
act or conduct;
(iii) Any expert or advisor or consultant or any other person
for any incorrect or misleading statement made to the
company or for any fraudulent, unlawful or wrongful act
or conduct or any likely act or conduct on his part
h) To seek any other remedy as the Tribunal may deem fit.
Who can file Class Action Suits ? [Section 245(3) read with Draft
Rule 16.1)
Members
Company having share capital Not less than 100 numbers or
members not less than 10% of the total number of members,
whichever is less or any members holding not less than 10%
of the issued capital.
Company without share capital - Not less than one fifth of the
total number of members
Deposit Holders
Not less than 100 depositors or not less than 10% of the total
number of depositors whichever is less or any depositors
holding not less than 10% of the total value of the outstanding
deposits of the company.
In respect of application admitted by the Tribunal:
Public notice shall be given to all members and deposit holders
All similar application in any jurisdiction should be consolidated
into a single application and Lead Applicant will be incharge of the
proceedings
Two class action applications for the same cause of action shall not
be allowed [Section 245(5)].
Public notice shall be served on admission of the application by the
Tribunal.
Lead applicant shall be in charge of the proceedings if similar application
is made by members / depositors in different jurisdiction [Section 245(5),(6)].
Order passed by the Tribunal is binding on:
a) The company and all its members and depositors
b) Auditor
c) Expert
d) Consultant
e) Advisor
f) Any other person associated with the company [Section 245(6)]
If the Application filed before Tribunal is found to be frivolous or
vexatious, Tribunal can reject and order applicants to pay cost not exceeding
Rs. 1 lakh [Section 245(8)].
A class action suit may be filed by any person, group of persons or
association of persons who have been affected by any misleading statement
or inclusion or omission of any matter in the prospectus.
Chapter XVII
REGISTERED VALUERS
If valuation is required to be made, under the provisions of the

Act, in respect of any property, stocks, shares, debentures,
securities or goodwill or any other assets or networth of a company
or liabilities, it should be made by a registered valuer appointed by
the Audit Committee or in its absence by the Board of directors of
the company [Section 247(1)].
The valuer shall not undertake valuation of any assets in which he
has direct or indirect interest or becomes so interested at any
time during or after the valuation of the assets [Section 247(2)(d)].
63
Chapter XVIII
REMOVAL OF NAMES OF COMPANIES FROM

THE REGISTER OF COMPANIES
Power of Registrar to Remove the Names of the Company

(Section 248):
The Registrar of Companies shall send a notice to the company
and all its directors of his intention to remove the name of the
company if:
a) a company has failed to commence business within one year

of its incorporation;
b) the subscribers to the memorandum have not paid subscription
amount and have not filed a declaration under the Act;
c) a company is not carrying on any business or operation in the
two preceding financial years.
A company may file an application with the Registrar for removal

of its name if it passes a special resolution to that effect after
extinguishing all its liabilities.
In the case of a company regulated under Special Act, approval of

the concerned regulatory body will be required.
The Registrar may, after adhering to the due processes, strike off
the companys name from the register of companies.
Restrictions for Removal of Name (Section 249)
A company cannot make application for removal of its name where

the company, within the previous three months:
a) has changed its name or shifted its registered office from one
state to another;
b) has disposed off property or rights held by it for gain;
c) has made an application to Tribunal for sanctioning of a

compromise or arrangement;
d) is being wound up whether voluntarily or by the Tribunal.

64
Fraudulent Application for Removal of Name (Section 251)
Fraudulent application made by the company for removal of its
name:
a) with intention to deceive creditors or other persons;
b) with the object of evading liabilities of the company will be
punishable for fraud under Section 447.
Chapter XIX
REVIVAL AND REHABILITATION OF SICK COMPANIES
Determination of Sickness (Section 253)

Secured creditors representing 50% or more in value terms can
file an application to the Tribunal for declaring a company as a sick
company if the company has failed to pay the debt within 30 days
of service of the notice of demand or to secure or compound it to
the reasonable satisfaction of the creditors [Section 253(1)].
The applicant mentioned above may at any stage of the proceedings
thereafter apply for the stay of proceedings for winding up of the
company or for execution against any property and assets of the
company or for the appointment of a receiver [Section 253(2)].
The company may also file an application with the Tribunal for
declaring it as a sick company [Section 253(4)].
After filing application before Tribunal, the company should not
dispose of its assets or properties except in the normal course of
business [Section 253(6)(a)].
Board of directors should not take any steps which are likely to
prejudice the interest of creditors [Section 253(6)(6)].
Application for Revival and Rehabilitation (Section 254)
Any secured creditor of a sick company may make an application
to the Tribunal for revival and rehabilitation of a sick company.
The reference to Tribunal shall abate and no reference can be made
to Tribunal if secured creditors representing 75% in value have
taken measures to recover their secured debt under Section 13 of
the SARFAESI Act.
Where the financial assets of the sick company has been acquired
by any securitization company or reconstruction company under
the SARFAESI Act, no such application shall be made without the
consent of such securitization or reconstruction company.
Appointment of Interim Administrator (Section 256)
The Tribunal may appoint an interim administrator to convene a
meeting of the creditors to ascertain whether it is possible to
revive and rehabilitate the sick company.
66
If no draft Scheme for revival and rehabilitation of the company
has been filed by the sick company, the Tribunal may direct the
interim administrator to takeover the management of the company
to protect and preserve the assets of the sick company
The interim administrator shall appoint a committee of creditors
and direct any promoter, director or KMP of the Company to attend
meetings of creditors (Section 257).
Order of Tribunal (Section258)
If the Tribunal is satisfied that it is not possible to revive and
rehabilitate such company, it can order that the proceedings for
the winding up of the company be initiated.
If Tribunal is satisfied that the company may be revived and
rehabilitated, it can appoint the interim administrator as the
company administrator and cause the administrator to prepare a
Scheme of Revival and Rehabilitation.
Sanction of the Revival and Rehabilitation Scheme (Section 262)
The Scheme prepared by the company administrator will be placed
before the creditors for their approval and if the Scheme is approved
it shall be submitted to the Tribunal.
If the Scheme relates to amalgamation of the sick company with
any other company, such Scheme should be approved by members
of both the companies by passing a Special resolution.
The Tribunal may make modifications in the Scheme in the light of
suggestions and objections received from sick company, company
administrator, transferee company, shareholders, creditors or
employees of such companies.
The sanction accorded by the Tribunal shall be conclusive.
Implementation of Scheme (Section 264)
Tribunal may authorise the company administrator to implement
the sanctioned Scheme and require him to submit periodic reports
on implementation.
If the Scheme is difficult to implement, the company administrator
or company or secured creditors or transferee company (in case
of amalgamation) may make an application to the Tribunal for
modification of the Scheme or declare that the Scheme has failed
and the company be wound up.
Rehabilitation and Insolvency Fund (Section 269)
A fund called the Rehabilitation and Insolvency Fund shall be
formed by the Central Government for the purposes of
rehabilitation, revival and liquidation of sick companies.
A company which has contributed any amount to the Fund can

withdraw the funds contributed by it (after making an application
to the Tribunal) for making payment to workmen, protecting the
assets of the company or meeting costs during the proceedings.
Chapter XXVIII
SPECIAL COURTS
Establishment of Special Courts

The Central Government, may for the purpose of providing speedy
trial of offences under the Act, establish as many special courts as
may be necessary (Section 435).
All offences under the Act shall be triable only by the special
courts. The special courts would have the liberty to try summary
proceedings for offences punishable with imprisonment for a term
not exceeding three years. In case of conviction under a summary
trial, sentence of imprisonment can be for maximum one year
(Section 436).
The provisions of the Code of Criminal Procedure, 1973 shall apply
to the proceedings before the special courts. Special courts shall
be deemed to be a court of session and the person conducting a
prosecution before the special court shall be deemed to be a public
prosecutor (Section 438).
Every offence under this Act (except the offences involving
investigation by SFIO) shall be deemed to be non-cognizable within
the meaning of the said code [Section 439(1)].
No Court shall take cognizance of an offence alleged to have been
committed by any company or any officer thereof except on a
complaint of the Registrar, a shareholder of a company or any
person authorised by the Central Government [Section 439(2)].
In the case of offences relating to issue and transfer of securities,
non-payment of dividend, cognizance of such offences can be
taken by the Court on the complaint by a person authorised by
SEBI [Section 439(2) proviso].
Transitional Provision (Section 440)
In respect of an offence under this Act, which is triable by a
special court shall until a special court is established, be tried by a
court of sessions exercising the jurisdiction over the area.
Compounding of certain Offences (Section 441)
Any offence punishable under the Act with fine only is
compoundable either before or after institution of any prosecution
by the Tribunal.
69
An offence is compoundable by the Regional Director where the

maximum amount of fine which may be imposed does not exceed
Rupees 5 lakh. The specified sum should not exceed the maximum
amount of fine which may be imposed for the offence.
In the case of an offence punishable with imprisonment or fine or
with both, compounding may be permitted by the special court.
However, an offence punishable with imprisonment only or with
imprisonment and fine is not compoundable, as they are serious
offences.
Mediation and Conciliation Panel (Section 442)
A mediation and conciliation panel consisting of such number of
experts having such qualifications as may be prescribed, shall be
maintained by Central Government for mediation between parties
during the pendency of any proceedings before the Central
Government or the Tribunal or the Appellate Tribunal under the
Act.
The Mediation and Conciliation Panel shall dispose of the matter
referred to it within a period of three months from the date of
such reference and forward its recommendations to the Central
Government or the Tribunal or the Appellate Tribunal, as the case
may be.
Any party aggrieved by the recommendations of the Mediation
and Conciliation Panel may file objections to the Central
Government or the Tribunal or the Appellate Tribunal.
Chapter XXIX
MISCELLANEOUS
Punishment for Fraud (Section 447)

Section 447 states that any person who is found guilty of fraud,
shall be punishable with imprisonment for a term which shall not
be less than six months but which may extend to ten years and
shall also be liable to fine which shall not be less than the amount
involved in the fraud but which may extend to three times the
amount involved in the fraud.
The section further states that where the fraud in question involves
public interest the term of imprisonment shall not be less than
three years.
The expressions fraud, wrongful gain and wrongful loss have
been comprehensively defined under section 447 of the Act.
Punishment for False Statement (Section 448)
Section 448 states that if in any return, report, certificate, financial
statement, prospectus, statement or other document required by the Act
or rules made thereunder, any person makes a statement:
(a) which is false in any material particulars, knowing it to be false; or
(b) which omits any material fact, knowing to be material.
he shall be liable under section 447.
Punishment for False Evidence (Section 449)
As per the provisions of section 449, if any person intentionally gives
false evidence:
(a) upon any examination on oath or solemn affirmation authorised
under the Act; or
(b) in any affidavit, deposition or solemn affirmation, in or about the
winding up of any company or otherwise in or about any matter
arising under the Act.
he shall be punishable with imprisonment for a term which shall not be
less than three years which may extend to seven years and with fine
which may extend to ten lakh rupees.
71
72 The Companies Act, 2013 A Ready Reference
Punishment in case of Repeated Default (Section 451)

Section 451 provides that if an offence punishable either with fine or
imprisonment is repeated within a period of three years, the company and
the officer thereof who is in default shall be punishable with imprisonment
as provided and twice the amount of fine for such default, for the second
and subsequent occasions.
Adjudication of Penalties (Section 454)
The Central Government may, by an order published in the official
gazette, appoint as many officers of the Central Government, not
below the rank of Registrar, as adjudicating officers for adjudicating
penalty under this Act.
The adjudicating officer may by an order impose the penalty on
the company and the officer who is in default stating the non-
compliance.
Any person aggrieved by the order made by adjudicating officer
may appeal to the Regional Director who may pass necessary orders,
which shall be final.
Annexure I
STATUTORY REGISTERS TO BE MAINTAINED UNDER
THE COMPANIES ACT 2013
1. Register of Members under section 88 in Form No. MGT 1

2. Register of Foreign members/ security holders under section 88
(optional)
3. Register of Debenture holders / other security holders under
section 88 in Form No. MGT 2
4. Register of renewed and Duplicate Share Certificates in Form No
SH 2
5. Register of Sweat Equity Shares under section 54 in Form No. SH -
3
6. Register of Employees Stock Option under section 62 in Form No.
SH - 6
7. Register of Shares or other Securities Bought Back under section
68 in Form No.SH-10
8. Register of Deposits under section 73 and 76 - Rule 14 of CAD
Rules 2014
9. Register of Charges under Section 85 in Form No. CHG-7
10. Register of Directors and KMP, under section 196 / 203 - Rule 17
of CAQD Rules 2014
11. Register of loans/guarantee/security and acquisition by the
company under Section 186 in Form No. MBP-2
12. Register of investments not held in its own name by the company
under section 187 in Form No.MBP-3
13. Register of Contracts with related party and contracts and bodies
etc in which directors are interested under Section 189 in Form
No. MBP-4
14. Register of Directors Attendance (Board meeting, Committee
meeting if the Articles so provide)
15. Register of Shareholders Attendance (Annual General Meeting/
General Meeting of members if the Articles so provide)
73
16. Minutes Books 1. Members; 2. Creditors; 3. Board of Directors;

4. Committees of Board of Directors
17. Books of Accounts /financial Statements under section 128
18. Register of destruction of Records / Documents under Companies
(Preservation and Disposals of Records) Rules 1966
Annexure II
MATTERS REQUIRING MEMBERS APPROVAL THROUGH
ORDINARY RESOLUTION
S.No. Section Matter
1. 4(5) Change of name pursuant to direction by Registrar of

Companies
2. 16(1) Rectification of name of the company which resembles

the name of another existing company
3. 20 Fee payable for delivery of document by a company

through a particular mode as per request of a member
4. 43 Issue of shares with differential voting rights
5. 61(1) Company altering memorandum of association (a) to

increase its authorised capital; (b) to consolidate and
divide all or any of its share capital; (c) to convert all
or any of its fully paid up shares into stock and re-
convert such sock; (d) sub-divide its shares and (e)
cancel shares.
6. 63(2) Issue of fully paid up bonus shares
7. 65 Unlimited company to provide for reserve share capital

on conversion into limited company
8. 73(2) To invite, accept deposits from members
9. 102(2) To transact following items of ordinary business at

AGM:
(a) Consideration of financial statements (including
consolidated financial statement, if applicable) and
the reports of the Board of Directors and Auditors;
(b) The declaration of any dividend;
(c) The appointment of directors in place of those
retiring;
75

(d) The appointment of and fixing of the remuneration
of the auditors.
10. 139(1) Appointment of auditors (including ratification in every

AGM and to fix his remuneration
11. 139(6) Failure to appoint first auditors by the Board of a

company (other than a government company)
12. 139(7) Appointment of first auditor of a government company,

in case Board and comptroller of audit general of India
fail to appoint an auditor
13. 139(8) Any casual vacancy in the office of an auditor of a

company (other than government company) caused
by the resignation of the auditor
14. 140(4) To appoint as auditor a person other than retiring

auditor
15. 143(8) To appoint branch auditor
16. 148 To fix the remuneration of cost auditor
17. 151 Appointment of directors elected by small shareholders
18. 152(2) Appointment of directors in general meeting
19. 161(a) Appointment of additional directors appointed by board

of directors
20. 161(b) To authorise the Board to appoint a person as an

alternate director in case articles do not provide
21. 169(a) Removal of directors before expiry of his term
22. 169(b) To appoint a person in place of director removed
23. 179(4) To impose restrictions and conditions on the exercise

by the Board of any of the powers specified in section
179
24. 181 Contribution to Charitable funds in excess of 5% of

the average net profits in the preceding three years
by a company

25. 187(3) To impose reasonable restrictions on inspection by any
member or debenture holder of register of investments
not held in its own name (alternatively articles can
impose restrictions)
26. 191(1) Payment to director for loss of office etc.in certain

cases
27. 192(1) Restriction on non-cash transactions involving directors
28. 196(4) Appointment of managing director, whole-time

director or manager
29. 197(1) Remuneration to directors in excess of 5% or 10% or

11% (as the case may be)
30. 197(4) Remuneration to directors for services rendered by

him in any other capacity
31. 197(11) Provision for increase in managerial remuneration
32. 304 Circumstances in which a company may be wound up

voluntarily
33. 310(1) To appoint a company liquidator and recommend fee

to be paid to him
34. 315 Appointment of committees to supervise voluntary

liquidation
35. 318 Liquidator to call a general meeting for laying the final
winding up accounts before it and pass a resolution
for companys winding up
Annexure III
SPECIAL RESOLUTION
A. Requirements under the Act
1. 5(3) & (4) Alteration of the Articles to incorporate provisions

of entrenchment in the Articles of Association
2. 12(5) Alteration of the provisions of the Memorandum

of Association with respect to:
(a) Change of registered office outside local
limits;
(b) Change in object clause
3. 13(1) & (4) To change place of registered office from one state
to another by alterations of memorandum
4. 13(2) To change the name of the company
5. 13(8) To change objects by the company which has raised

money from public through prospectus
6. 14(1) To alter the articles of association
7. 14(1) Conversion of a public company into a private

company
8. 27(1) To vary the terms of a contract referred to in the

prospectus or objects for which the prospectus
was issued
9. 41 To issue Global Depository Receipts
10. 48(1) & (2) Variation of shareholders rights
11. 54(1) Issue of sweat equity shares

78

12. 55(3) Issue of further redeemable preference shares to
redeem previously issued shares
13. 62(1)(b) Further issue of shares by way of ESOP
14. 62(1)(c) Issue of further shares to non-members
15. 62(3) To issue debentures or loans with conversion option
16. 66(1) Reduction of share capital
17. 67(3)(b) Providing financial assistance for purchase of

securities of the company under a scheme
18. 68(2)(b) Powers of company to purchase its own securities
19. 71 Issue of convertible debentures
20. 71(7) Liability of debenture trustee subject to

exemptions
21. 76 Acceptance of deposits from public by eligible

companies
22. 94(1) Place of keeping registers and returns at any place

other than registered office
23. 139(9)(c) Appointment of some other auditor as auditor in

place of a retiring auditor
24. 140(1) Removal of auditor before expiry of his term
25. 149(1)(b) Increase in maximum number of directors beyond

15 directors
26. 149(10) Appointment of an independent director for the

second term of five years
27. 165(2) Members may specify the number of companies

beyond which a director of a company shall not
act as a director
28. 180(1) Restriction on powers of Board

29. 185(1) Loan to Directors
30. 186(2) & To make loan and investment by company beyond

186(3) threshold limits
31. 188(1) & To approve related party transactions

188(3)
32. 196(3) Appointment of managing director / whole-time

director / manager where he is more than 70 years
33. 197(4) Remuneration to directors of a company if the

articles of association so require
34. 210(1) Investigation into affairs of the company
35. 212(1) Investigation into affairs of company by SFIO

office
36. 226 Voluntary winding up of company etc. not to stop

investigation proceedings
37. 230 Power to compromise or make arrangements with

creditors and members
38. 248(2) Application by company to ROC for removal of

the name of the company from the register of
companies on specified grounds
39. 262(2) Sanction of scheme of revival and rehabilitation
40. 264 Modification of the scheme of revival and

rehabilitation or winding up of the company
(secured creditors to approve by three-fourth in
value)
41. 271(1) Circumstances in which a company may be wound

up by Tribunal
42. 304 Circumstances in which company may be wound

up voluntarily
43. 311 Power to remove and fill vacancy of company

44. 314(3) Powers and duties of company liquidator in

voluntary winding up
45. 319 Power of company liquidator to accept shares etc.

as consideration for sale of property of company
46. 321 Arrangement when binding on company and

creditors
47. 343 Company liquidator to exercise certain powers

subject to sanction
48. 347(1) To dispose the books and papers of the company

and those of Company Liquidator in case of
voluntary winding up
49. 371(3) Table F in Schedule I shall not apply unless adopted

by special resolution
50. 406 Acquire another company by purchase of securities

or control the composition of the Board of any
other company by a nidhi company
51. Schedule-V Limit of yearly remuneration to managerial

Part-II of personnel if proposed to be doubled
Section-II
B. Requirement under the Rules
1. The Companies (Incorporation) Rules, 2014
(a) Rule No. 7(1) Conversion of a private company into one

person company
(b) Rule No. 21(1) Conversion of a company registered under

section 8 into a company of any other kind
(c) Rule No.22(10) Company of any other kind consequent to

conversion of section 8 companies to pass a
special resolution for amending its
memorandum of association and articles of
association as required under the Act
2. The Companies (Management and Administration) Rules, 2014
(a) Rule No.5(2) Maintenance of register of members etc. at

any other place (other than registered office)
within the city, town, or village in which the
registered office is situated or any other place
in India in which more than one tenth of the
total members reside
3. The Companies (Appointment and Remuneration of Managerial

Personnel) Rules, 2014
(a) Rule No. 6 & 7 Application to central government for

payment of managerial remuneration for a
period not exceeding three years
4. Companies (Miscellaneous) Rules, 2014
(a) Rule No.3 Shareholders approval for obtaining status of

dormant company
Annexure IV
POSTAL BALLOT
S.No. Matter
1. Alteration of objects clause of the memorandum and in the

case of the company in existence immediately before the
commencement of the Act, alteration of the main objects of
the memorandum
2. Alteration of articles of association in relation to insertion or

removal of provisions, which under sub-section (68) of section
2, are required to be included in the articles of a company in
order to constitute it a private company
3. Change in place of registered office outside the local limits of

any city, town or village as specified in sub-section (5) of
section 12
4. Change in objects for which a company has raised money

from public through prospects and still has any unutilized
amount out of the money so raised under sub-section (8) of
section 13
5. Issue of shares with differential rights as to voting or dividend

or otherwise under sub-clause (ii) of clause (a) of section 43
6. Variation in the rights attached to a class of shares or

debentures or other securities as specified under section 48
7. Buy-back of shares by a company under sub-section (1) of

section 68
8. Election of a director under section 151 of the Act
9. Sale of the whole or substantially the whole of an undertaking

of a company as specified under sub-clause (a) of sub-section
(1) of section 180
83
S.No. Matter
10. Giving loans or extending guarantee or providing security in

excess of the limits specified under sub-section (3) of section
186
11. Variation in terms of contracts referred to in the prospectus

or objects for which prospectus was issued under Rule 7 of
the Companies (Prospectus and Allotment of Securities) Rules,
2014
Annexure V
LIST OF ITEMS REQUIRED TO BE PLACED ON
COMPANYS WEBSITE UNDER THE COMPANIES ACT,
2013 AND LISTING AGREEMENT
S.No. Section No. Matter
1. Section 13(8) Details of the notice in respect of a special

resolution for change of objects in the
memorandum by a company which has
raised money from the public and still has
unutilized money so raised indicating the
justification
2. Section 124(2) Statement containing the names, their last

known addresses and the unpaid dividend
to be paid to each person
3. Section 135(1) Corporate Social Responsibility Policy
4. Section 136(1) Financial statements including

consolidated financial statements, if any,
and all other documents required to be
attached thereto
5. Section 136(1) Separate audited accounts in respect of

each subsidiary on the holding companys
website
6. Section 177(10) Details of establishment of vigil

mechanism for directors and employees
7. Section 230(3) A notice calling a meeting of all members

or creditors and debentureholders of the
company accompanied by a statement
disclosing the details of compromise or
arrangement, a copy the valuation report,
if any
8. Schedule IV Code of independent directors
85
S.No. Section No. Matter
9. Schedule IV The terms and conditions of the

appointment of independent directors
10. Revised clause 49 Policy of the company on material related

VII(c) of Listing party transactions and dealing with related
Agreement party transactions
11. Revised clause Code of conduct for all Board members

49(2)(E)(1) of and senior management of the company
Listing Agreement
12. Clause 55 of the Business responsibility policies by listed

Listing Agreement companies optional for website display.
Annexure VI
LIST OF LAWS FOR COMPLIANCE
S.No. Laws Covered
1 Applicable Municipal / Panchayat Laws
2 Apprentices Act,1961
3 Arms Act, 1959
4 Atomic Energy Act, 1962
5 Batteries (Management & Handling) Rules, 2001
6 Benami Transaction (Prohibition) Act,1988
7 Bio-Medical Waste (Management & Handling) Rules, 1998
8 Bombay Industrial Relations Act, 1946
9 Bombay Labour Welfare Fund Act, 1953
10 Bombay Lift Act, 1939
11 Bombay Tenancy and Agriculture Lands Act, 1949
12 Central Motor Vehicles Rules, 1989
13 Central Sales Tax Act,1956
14 Cenvat Credit Rules, 2004
15 Chapter V of Finance Act,1994 and the Service Tax Rules 1944
16 Child Labour (Prohibition & Regulation) Act, 1986
17 Collection of Statistics Act, 1953
87
S.No. Laws Covered

18 Companies Act, 2013
19 Competition Act, 2002
20 Contract labour (Regulation and Abolition) Act,1970
21 Customs Act,1962
22 Dangerous Machines (Regulation ) Act, 1936
23 Depositories Act,1996
24 Employees Provident Fund and Miscellaneous Provisions Act,

1952
25 Employees State Insurance Act,1948
26 Employers Liability Act,1938
27 Employment Exchange (Compulsory Notification of Vacancies)

Act, 1959
28 Environment (Protection) Act, 1986
29 Equal Remuneration Act,1976
30 Essential Commodities Act, 1955
31 Expenditure Tax Act,1987
32 Explosive Substances Act, 1908
33 Explosives Act, 1884
34 Factories Act,1948
35 Foreign Exchange Management Act,1999
36 Foreign Trade (Development and Regulation) Act,1992
37 Gas Cylinder Rules, 1981
38 Gujarat Labour Welfare Fund Act, 1953

S.No. Laws Covered
39 Gujarat Lift & Escalators Act, 2000
40 Gujarat Maritime Board Act,1981
41 Gujarat Physically Handicapped Person (Employment in

Factories) Act, 1982
42 Hazardous Wastes (Management and Handling) Rules, 1989

& Amendment Rule 2003
43 Income Tax Act,1961
44 Indian Boilers Act, 1923
45 Indian Contract Act,1872
46 Indian Electricity Act, 1910
47 Indian Ports Act,1908
48 Indian Stamp Act, 1899
49 Indian Wireless Telegraph Act, 1933
50 Industrial Disputes Act,1947
51 Industrial Employment (Standing Orders) Act,1946
52 Industries (Development & Regulation) Act, 1951
53 Information Technology Act, 2000
54 Insurance Act,1938
55 Interest Tax Act,1974
56 International Convention for Safety of Life at Sea, 1974
57 Interstate Migrant Workmen (Regulation of Employment &

Condition of Service) Act, 1979
58 Land Acquisition Act, 1894
59 Limitation Act, 1963

S.No. Laws Covered

60 Maharashtra Workmens Minimum House Rent Allowance Act,
1983
61 Manufacture, Storage and Import of Hazardous Chemical Rules,

1989
62 Maternity Benefits Act,1961
63 Minimum Wages Act,1948
64 Motor Vehicles Act, 1988
65 MS (Carriage of Cargo) Rules, 1995
66 MS (Fire Appliances) Rules, 1990
67 MS (Live Saving Appliances) Rules, 1991
68 MS (Load Line) Rules, 1979
69 MS (Management for Safe Operation of Ships) Rules, 1991
70 MS (Radio Direction Finders) Rules, 1968
71 Mumbai Lift Rules 1958
72 Negotiable Instruments Act,1881
73 Noise Pollution (Regulation and Control) Rules, 2000
74 Ozone Depleting Substances (Regulation and Control) Rules,

2000
75 Payment of Bonus Act,1965
76 Payment of Gratuity Act,1972
77 Payment of Wages Act,1936
78 Personal Injuries (Compensation Insurance) Act,1963
79 Petroleum Act, 1934
80 Prevention of Food Adulteration Act, 1954

S.No. Laws Covered

81 Prevention of Money Laundering Act, 2002
82 Profession Tax Act
83 Public Liability Insurance Act,1991
84 Punjab Labour Welfare Fund Act, 1965
85 Registration Act, 1908
86 Regulations of Coastal Regulatory Zone Authority
87 Rules, Regulations made under Insurance Laws
88 Sale of Goods Act, 1930
89 SEBI ( Prohibition of Insider Trading) Regulation,1992
90 Securities and Exchange Board of India Act,1992
91 Securities Contracts (Regulation) Act,1956
92 Sick Industrial Copanies (Special Provisions) Act, 1985
93 Standard of Weights & Measures Act, 1976
94 Standard of Weights and Measures (Enforcement)Act, 1985
95 State Sales Tax/VAT Acts
96 State Shop and Establishment Acts
97 Static Mobile Pressure Vessels (Unfired) Rules, 1981
98 The Air (Prevention and Control of Pollution) Act, 1981
99 The Bombay Electricity Duty Act, 1958
100 The Bombay Prohibition Act, 1949
101 The Bombay Public Trusts Act, 1952
102 The Bombay Stamp Act, 1958

S.No. Laws Covered

103 The Building and Other Construction Workers(Regulation of
Employment of Service) Act
104 The Central Excise Act,1944
105 The Central Excise Tariff Act,1985
106 The Chemical Accidents (Emergency Planning, preparedness

& Response) Rules, 1996
107 The Electricity (Gujarat Amendment) Act, 1976
108 The Electricity Act, 2003
109 The Indian Telegraph Act, 1885
110 The Maharashtra Recognition of Trade Unions & Prevention of

Unfair Labour Practices Act, 1971
111 The Marine Insurance Act,1963
112 The Poisons Act, 1919
113 Trade Union Act,1926
114 Transfer of Property Act, 1882
115 UP Trade Tax Act, 1948
116 Urban Land (Ceiling & Regulation) Act, 1976
117 US Securities laws pursuant to Rule 12g-3(2)(b) of Securities

& Exchange Act,1934
118 Water (Prevention and Control of Pollution) Act, 1974
119 Water (Prevention and Control of Pollution) Cess Act, 1977
120 Wealth Tax Act,1957
121 Weekly Holidays Act,1942
122 Workmens Compensation Act,1923

Annexure VII
SPECIMEN FORMAT OF COMPLIANCE CERTIFICATE
Board of Directors
XYZ Limited
________________
________________
________________
Dear Sirs,
Quarterly Certificate Compliance with Various Applicable Laws
I have received Compliance Certificates from all the concerned units/
department heads, who are responsible for ensuring compliance with laws
applicable to their respective areas of business and affairs of the Company,
certifying that our Company has complied with all the relevant provisions
and requirements of various laws, enactments and the rules, regulations,
guidelines, orders, circulars, clarifications framed / issued thereunder in
so far as they are applicable to our Company.
I have examined and considered the certificates and certify that for
the period January 1, 2014 to March 31, 2014, our Company has in the
conduct of business:
1) complied with all the applicable laws, enactments, orders, rules,
regulations and other statutory requirements of the Central, State
and other statutory and local authorities concerning the business
and affairs of the Company as per Annexure;
2) paid all applicable statutory dues on due dates;
3) maintained proper registers, records, documents and books and
filed proper returns, forms and statements and furnished necessary
particulars to the relevant authorities; and
4) not done or committed any act or entered into any transactions in
violation of any statutory provisions.
Dated this _____ day of ______, 2014 Sd/-
Place: _________ Company Secretary
Encl.: As above.
93
Annexure VIII
COMMITTEES
CSR Committee Audit Committee Nomination and Remuneration Stakeholder Relationship

(Section 135) (Section 177) Committee (Section 178) Committee (Section 178)
Applicability
Every company (which may Every listed company and the Every listed company and the following A company which consists of
include a holding company or a following classes of companies is classes of companies is required to more than one thousand
subsidiary company) having: required to constitute a Audit constitute a Nomination and Remuneration shareholders, debenture-
a) net worth of rupees five Committee of the Board- Committee of the Board- holders, deposit-holders and
hundred crore or more, or; (i) all public companies with a (i) all public companies with a paid up any other security holders at
b) turnover of rupees one paid up capital of ten crore capital of ten crore rupees or more; any time during a financial year
thousand crore or more or; rupees or more; (ii) all public companies having turnover shall constitute a Stakeholders
c) a net profit of rupees five (ii) all public companies having of one hundred crore rupees or more; Relationship Committee.
crore or more during any turnover of one hundred (iii) all public companies, having in
financial year. crore rupees or more; aggregate, outstanding loans or
Foreign company having its (iii) all public companies, having borrowings or debentures or
branch office or project office in in aggregate, outstanding deposits exceeding fifty crore
India. loans or borrowings or rupees or more.
94
The Companies Act, 2013 Ready Referencer
debentures or deposits
exceeding fifty crore rupees
or more.
Composition
Three or more directors, out of The Audit Committee shall The Committee so constituted by the Stakeholders Relationship
which at least one director shall consist of a minimum of three Board shall consist of three or more non- Committee shall consist of a
be an independent director. directors with independent executive directors out of which not less chairperson who shall be a
Further: directors forming a majority. The than one-half shall be independent non-executive director and
1. an unlisted public company majority of members of Audit directors. such other members as may
or a private company which Committee including its Chair- The chairperson of the company (whether be decided by the Board.
is not required to appoint an person shall be persons with executive or non-executive) may be The chairperson of the
independent director, shall ability to read and understand, appointed as a member of the committees or, in his absence,
have its CSR Committee the financial statement. Nomination and Remuneration any other member of the
without such director. In addition to this, the Revised Committee but he shall not chair such committee authorised by him
2. a private company having Clause 49 of the listing Committee. In case of a listed company as in this behalf is required under
only two directors on its agreement provides that audit per revised clause 49 Chairman of the the section to attend the
Board shall constitute its committee of listed company committee shall be an independent director. general meetings of the
CSR Committee with two shall have minimum three The chairperson of the committees or, in company.
such directors. directors as members. Two-thirds his absence, any other member of the
3. with respect to a foreign of the members of audit committee authorised by him in this
company covered under committee shall be independent behalf is required under the section to
these rules, the CSR directors. All members of audit attend the general meetings of the
Committee shall comprise of committee shall be financially company. In contrast to this, the revised
at least two persons of literate and at least one member clause 49 provides that the Chairman of
95
which one person shall be as shall have accounting or related the nomination and remuneration
96
specified under clause (d) financial management expertise. committee could be present at the Annual
of sub-section (1) of General Meeting, to answer the share-
section 380 of the Act and holders' queries. However, it would be up
another person shall be to the Chairman to decide who should
nominated by the foreign answer the queries.
company.
Functions:

The Committee functions are as The Committee functions are as The Committee functions are as under: The main function of the
under: under: committee is to consider and
(a) formulating and recommen- 1. The Audit Committee may 1. identify persons who are qualified to resolve the grievances of
ding to the Board, a CSR call for the comments of the become directors and who may be security holders of the
Policy which shall indicate auditors about internal appointed in senior management in company.
the activities to be under- control systems, the scope of accordance with the criteria laid On similar terms revised
taken by the company as audit, including the obser- down, recommend to the Board clause 49 of the listing
specified in Schedule VII; vations of the auditors and their appointment and removal. agreement provide that a
(b) recommending the amount review of financial statement Further it has been attached with a committee under the
of expenditure to be before their submission to wider responsibility of carrying out Chairmanship of a non-
incurred on the CSR the Board and may also evaluation of every directors executive director and such
activities. discuss any related issues with performance. other members as may be
(c) monitoring the Corporate the internal and statutory 2. Formulate the criteria for decided by the Board of the
Social Responsibility Policy of auditors and the manage- determining qualifications, positive company shall be formed to
the company from time to ment of the company. attributes and independence of a specifically look into the
time. 2. The Audit Committee shall director and recommend to the redressal of grievances of
(d) Further the rules provide have authority to investigate Board a policy, relating to the shareholders, debenture
that the CSR Committee into any matter in relation to remuneration for the directors, holders and other security
shall institute a transparent the items specified in terms key managerial personnel and holders. The grievances of the
monitoring mechanism for of reference or referred to other employees. While formulating security holders of the
implementation of the CSR it by the Board and for this the policy the committee shall company may include
projects or programs or purpose shall have power to consider the following: complaints related to transfer
activities undertaken by the obtain professional advice a) the level and composition of of shares, non-receipt of
company. from external sources and remuneration is reasonable and balance sheet, non-receipt of
have full access to infor- sufficient to attract, retain and declared dividends, which shall
mation contained in the motivate directors of the quality be handled by this committee.
records of the company. required to run the company
3. The auditors of a company successfully;
and the key managerial b) relationship of remuneration to
personnel shall have a right performance is clear and meets
to be heard in the meetings appropriate performance benchmarks;
of the Audit Committee and
when it considers the c) remuneration to directors, key
auditors report but shall managerial personnel and senior
not have the right to vote. management involves a balance
between fixed and incentive
pay reflecting short and long-term
performance objectives appropriate
to the working of the company and
its goals.
97
Annexure IX
CHAPTER-WISE HIGHLIGHTS WITH LIST OF E-FORMS AND PHYSICAL FORMS PRESCRIBED BY

RULES MADE THEREUNDER
Notification status Highlights of the Act read with notified rules if any List of important e-forms List of physical forms
prescribed in the Rules prescribed
Chapter I- Definitions
(Sections 1-2)
Fully notified other than New Definitions added with respect to certain critical
2(23), 2(29)(iv), 2(67)(ix) terms including the following:
1. Associate Company
2. Auditing Standards
3. Chief Executive Officer
4. Chief Financial Officer
5. Company Liquidator
6. Control
7. Financial Institution
8. Financial Statement
98
9. Global Depository Receipts

10. Independent Director
11. Indian Depository Receipts
12. Key Managerial Personnel
13. One person company
14. Serious Fraud Investigation Office
15. Small Company
16. Related Party
17. Voting Right
Certain Definitions (as already defined under
Companies Act, 1956) have been modified in
Companies Act , 2013, with better harmony and scope,
including the following:
1. Expert
2. Books and Paper/Books of Accounts
3. Charge
4. Control
5. Deposit
6. Director
7. Expert
8. Free Reserves
9. Interested Director
10. Officer in Default
11. Subsidiary Company
99
100
Chapter II -Incorporation of the Company and Matters Incidental thereto
(Sections 3-22)
Fully notified other than Concept of One Person Company has been INC-1 - INC 8- Declaration from the
Section 7(7), Section 8(9) introduced and the OPC can be formed as private Application for reservation professional as to compliance
and second proviso to limited company. of name INC 9 Affidavit from
Section 14(1) and Numbers of permissible members in private company INC-2- subscribers
Section 14(2). has been raised to 200. Form for Incorporation and INC 10- Form for verification
The Memorandum of Association shall state the nomination (One Person of signature of subscribers by
mandatory objects. Company) witness.

Articles of Association may contain provisions with INC-3- INC 11 Certificate of
respect to entrenchment. Form for consent of nominee Incorporation
If a company has raised any Money from public of One Person Company INC 13- Memorandum of
through prospectus and if there is any unutilised INC-4- Association
amount out of the money so raised, it shall not change Form for change in member/ INC 14 & INC 15
its objects unless a special resolution is passed and nominee of One Person Declaration regarding
other requirements of advertisement and exit Company section 8 Company
opportunity to dissenting shareholders etc. is INC-5- INC 16 & 17- Licence under
complied with. Form for intimation of Section 8 Company
A declaration in the form INC-8 by an advocate, a exceeding threshold of One INC 19 Notice by applicant
chartered accountant, cost accountant or company Person Company under Section 8
secretary in practice, who is engaged in the formation INC-6- INC 25- Certificate of
of the company, and by a person named in the Application for Conversion incorporation pursuant to
articles as a director, manager or secretary of the INC-7- change of name
company, that all the requirements of this Act and Application for Incorporation INC 26 Advertisement to be
the rules made thereunder in respect of registration of Company (Other than One published in news paper for
and matters precedent or incidental thereto have Person Company) licence for existing companies
been complied with;
All the Forms(physical/e-forms) start with the INC-18-

nomenclature -INC Application to Regional
Director for conversion of
section 8 company into any
other kind of company
INC-20
Intimation to Registrar of revo-
cation or surrender of license
issued under section 8
INC-21
Declaration prior to the
commencement of business
INC-22
Notice of situation or change
of situation of registered office
and verification
INC-23-
Application to Regional director
for approval to shift the
registered office from one
state to another state or from
jurisdiction of one registrar to
another within the state
INC-24-
Application for approval of
Central Government for
101
change of name
102
INC-27-
Conversion of public company
into private company or private
company into public company
INC-28-
Notice of order of the Court or
other authority
Chapter III - Prospectus and Allotment of Securities
(Sections 23-42)

Fully notified A public company may issue securities in any of the PAS 2 Information PAS 1- Advertisement giving
following manners: Memorandum the details of special
To public through prospectus PAS-3- resolution varying the terms
Through private placement Return of allotment of contract referred in the
Through rights issue or a bonus issue. prospectus.
For private companies, this section provides that it PAS 4- Private placement
may issue securities through private placement, by offer letter
way of rights issue or bonus issue. PAS 5- Record of private
"Public offer" includes initial public offer or further placement offer
public offer of securities to the public by a company, or
an offer for sale of securities to the public by an
existing shareholder, through issue of a prospectus.'
Provides for offer of sale by existing shareholders to
public.
Issue of Global Depository Receipts by passing the
special resolution and subject to such conditions as
may be prescribed.
Private placement" means any offer of securities or

invitation to subscribe securities to a select group of
persons by a company (other than by way of public
offer) through issue of a private placement offer letter
and which satisfies the conditions specified in this
section.
Any company making any offer or invitation of
securities under private placement has to allot the
securities within 60 days of receipt of application
money.
All the Forms(physical/e-forms) start with the
nomenclature PAS.
Chapter IV- Share Capital and Debentures

(Sections 43-72)
Fully notified except Company cannot issue shares at discount other than SH-7- SH 1 Share Certificate
Section 48, 55(3), proviso 2 as sweat equity. Notice to Registrar for alteration SH2- Register of renewed or
clause b of sub-section 1 of Issue of Sweat equity shares to be authorized by of share capital duplicate share certificates.
Section 61, 62(4)-62(6) and special resolution at a general meeting. SH-8- SH3- Register of Sweat equity
Section 66, 71(9)-71(11) Company cannot issue irredeemable preference letter of offer shares.
shares or redeemable preference shares with the SH-11 SH 4- Securities transfer form
redemption period beyond 20 years. Company Return in respect of buy back of SH 5- Notice for transfer of
engaged in the setting up and dealing of infra- securities partly paid-up shares
structural projects may issue preference shares for a SH 6 Register of Employee
103
period exceeding twenty years but not exceeding Stock Option
104
thirty years, subject to the redemption of a minimum SH 10 Register of Securities

ten percent of such preference shares per year from bought back
the twenty first year onwards or earlier, on propor- SH 12- Debenture Trust
tionate basis, at the option of the preference share- Deed
holders. SH 13- Nomination form
The conditions under which the preference share- SH 14- Cancellation or
holders can vote on every resolution placed before variation of nomination
meeting of shareholders has been changed. SH 15- Certificate of
If the variation of one class of shareholders affects the compliance in respect of buy

rights of any other class of shareholders the consent back of securities.
of th of that class should also be obtained.
Issue of shares on preferential basis, requires special
resolution and valuation by registered valuer.
An instrument of transfer of securities held in physical
form shall be in Form No.SH.4 and every instrument
of transfer with the date of its execution specified
thereon shall be delivered to the company within
sixty days from the date of such execution.
When the company issues prospectus or makes an
offer or invitation to the public or to its members
exceeding five hundred for the subscription of its
debentures, it is required to appoint a debenture
trustee.
All the Forms(physical/e-forms) start with the
nomenclature SH.
Chapter V- Acceptance of Deposits by Companies

(Sections 73-76)
Fully notified except Prohibition of acceptance of deposits from persons DPT 1- Circular in the form of
Section 74(1) and Section 75 other than members unless networth /turnover criteria advertisement inviting
are fulfilled. deposits
All the Forms(physical/e-forms) start with the nomen-
clature DPT. DPT 2- Deposit Trust deed
DPT 3 Return of Deposits
DPT 4 Statement regarding
deposits existing on the
commencement of the Act
Chapter VI- Registration of Charges
(Sections 77-87)
Fully notified Every company creating a charge within or outside CHG-1- CHG 2- Certificate of
India, on its property or assets or any of its under- Application for registration of Registration of charge.
takings, whether tangible or otherwise, and situated in creation, modification of charge CHG 3- Certificate of
or outside India, to register the particulars of the (other than those related to registration of Modification of
charge signed by the company and the charge-holder debentures) including Charge
together with the instruments, if any, creating such particulars of modification of CHG 5- Memorandum of
charge in Form No. CHG-1 (for other than charge by Asset satisfaction of charge.
Debentures) or Form No. CHG-9 (for debentures Reconstruction Company in CHG 7- Register of charges
including rectification). The Charge has to be terms of Securitization and
registered within 30 days of its creation. The Registrar Reconstruction of Financial
105
can condone the delay upto 300 days of creation of Assets and Enforcement of
charge. Securities Interest Act, 2002
106
All the Forms(physical/e-forms) start with the CHG-4-
nomenclature CHG Particulars for satisfaction of
charge
CHG-6-
Notice of appointment or
cessation of receiver or manager
CHG-9-
Application for registration of
creation or modification of

charge for debentures or
rectification of particulars
filed in respect of creation
or modification of charge for
debentures
Chapter VII - Management and Administration

(Sections 88-122)
Fully notified except Enhanced disclosures in the Annual Return MGT-6- MGT1- Register of Members
Sections 97-99, Penalty prescribed for tampering minutes. Form of return to be filed with MGT 2- Register of debenture
Section 119(4) Every listed company shall file a return in the the Registrar holders/other security
prescribed form with the Registrar with respect to MGT-14- holders
change in the number of shares held by promoters Filing of Resolutions and MGT 3- Notice regarding
and top ten shareholders of such company, within agreements to the Registrar place of keeping the registers
15 days of such change. under section 117 MGT 4- Declaration of
The resolution requiring special notice has to be beneficial interest (by
moved by such number of members holding not registered owners)
less than 1 % of total voting power or holding shares MGT 5- Declaration of
on which an aggregate sum of not less than one beneficial interest by persons
lakh rupees has been paid-up. holding beneficial interest.
Notice of General Meeting in electronic mode MGT 6- Return to registrar
permitted. regarding beneficial interest.
Secretarial Standards for Board and General MGT 7- Annual Return
Meeting introduced. MGT 8- Certificate by
Punishment for Company Secretary for certifying Company Secretary in
annual return not in conformity. Practice
All the Forms(physical/e-forms) start with the MGT 9- Extract of Annual
nomenclature MGT. Return
MGT 10 Changes in the
shareholding position of
promoters and top ten
shareholders.
MGT 11- Proxy form
MGT 12 Polling paper
MGT 13- Report of the
Scrutinizer
MGT 15- Form for filing the
report on AGM.
Chapter VIII - Declaration and Payment of Dividend

(Sections 123-127)
Fully notified except No dividend can be declared in case of failure of
107
Section 124-125 repayment of deposits or interest thereof.
108
Chapter IX - Accounts of Companies
(Sections 128-138)
Fully notified except Maintenance of books of accounts in electronic mode AOC 1- Statement containing
Section 130-132 permitted. salient features of the
Compulsory placing of accounts on companys financial statement of
website by listed companies. subsidiaries/associate
Voluntary revision of financial statements or Boards companies/joint ventures
report. AOC 2- Related party
Re-opening of accounts on tribunals order. disclosure

Mandates preparation of consolidated financial AOC 3- Statement containing
statements for all companies which have one or more salient features of Balance
subsidiaries in addition to the standalone financial Sheet and Profit and Loss
statements. Account
Boards report has been made more informative with AOC 4- Form for filing
extensive additional disclosures like a statement on financial statement and other
declaration of independence by the independent documents with the registrar.
directors, related party transactions, policy on
directors appointment and remuneration, ratio of
remuneration to each director to the median employees
remuneration, policy developed and implemented by
the company on corporate social responsibility.
Mandates internal audit for prescribed class of
companies.
Prescribed companies to spend atleast 2% of the
average net profits made during the 3 immediately
preceding financial year.
Chapter X - Audit and Auditors
(Sections 139-148)
Fully notified except second Time bound annual appointment/re-appointment of ADT 1- Notice of
proviso to sub-section (4) auditors by CAG for Government Companies. appointment of Auditors
and sub-section (5) of Compulsory Rotation of Auditors ADT 2- Application for
Section 140 Auditors not to render certain services removal of auditors before
Tribunal may direct the Company to change the the expiry of term.
auditors ADT 3- Notice of Resignation
Indebtedness of relative of auditor, associate company of Auditor
are disqualifications to be appointed as auditor. ADT 4- Report to Central
Auditor to attend the Annual General Meetings. Government, suspecting
Cost Auditing Standards made mandatory. offence involving fraud.
Chapter XI - Appointment and Qualifications of Directors

(Sections 149-172)
Fully notified except Compulsory appointment of women director for DIR-3- DIR 1- Application for
Section 169(4) certain class of companies. Application for allotment of inclusion in databank of
Compulsory appointment of resident director. Director Identification Number independent directors
Listed companies to have at least 1/3rd of the total DIR-6- DIR 2- Consent to act as
number of directors as independent directors. Intimation of change in director
Maximum number of directors is 15. particulars of Director to be DIR 4- verification of
Limitation of liability of non-executive directors and given to the Central applicant for application for
independent directors. Government DIN
Declaration from director stating that he is not DIR 11- DIR 5- Application for
109
disqualified to be appointed as director. Notice of Resignation of surrender of DIN
Duties of directors are directly spelt out. Director to the Registrar. DIR 7- Verification of
110
DIR 12- applicant for change in DIN

Particulars of Appointment particulars
of Directors, Key Managerial DIR 8- intimation by director
Personnel and Change amongst about other directorships /
them previous disqualification if any
etc.
DIR 9- report by a company
to registrar
DIR 10 Form of application

for removal of disqualification.
Chapter XII - Meetings of the Board and its Powers

(Sections 173-195)
Fully notified Notice of Board Meeting in electronic mode. MBP-1- Notice of interest by
Participation of directors at the Board Meeting Director
through video conferencing permitted. MBP 2- Register of loans etc.
Every listed company and other class of companies MBP 3- Register of
to set up vigil mechanism for directors/employees to investments not in own name
report genuine concerns. MBP 4- Register of contracts
Setting up of nomination and remuneration with related party.
committee for certain class of companies.
Prohibition of loans to directors or giving guarantee or
providing security in connection with loan taken by
director of the company.
The scope of related party transactions and the
disclosure requirements thereof widened.
Prohibition on forward dealings in securities of
company by a Key managerial Personnel.

Prohibition of insider trading of securities.
Bar on investment through more than 2 layers of
investment companies
Requirement to disclose inter-corporate loans made
by company, inter-corporate investments in its
financial statement.
Chapter XIII - Appointment and Remuneration of Managerial Personnel

(Sections 196-205)
Fully notified Separation of officers of Chairman and MD/CEO. MR-1 MR3- Secretarial Audit
Appointment of Key Managerial Personnel for Certain Return of appointment of Report
class of companies. managing director or whole time
Ratio of remuneration of each director to the median director or manager
employees remuneration to be disclosed in the MR-2
Boards report of every listed company. Form of application to the
Mandatory Secretarial Audit for Certain class of Central Government for
companies. approval of appointment or
Functions of Company Secretary defined. reappointment and remune-
ration or increase in remune-
ration or waiver for excess or
over payment to managing
director or whole time director
or manager and commission or
111
remuneration to directors
112
Chapter XIV - Inspection, Inquiry and Investigation

(Sections 206-229)
Fully notified except Investigation into the affairs of the Company by SFIO.
Section 212(8) Reciprocal arrangement with other countries for
Section 212(10), Section 213, assistance in investigation of affairs of companies.
216(2), Section 218, Freezing of assets on an inquiry and investigation of a
Section 221-222, company.
Section 224(2), 224(5) and Investigation of foreign companies.
Section 226-227

Chapter XV - Compromises and Arrangements
(Sections 230-240)
Yet to be notified Compromise/arrangement to include takeover offers.

Detailed disclosure by applicant through affidavit, to
the tribunal, disclosing the material facts relating to
the company.
No sanction for compromise or arrangement if
accounting treatment not compliant with accounting
standards.
Specific provisions for demergers.
Cross border mergers facilitated.
Fast track merger for small companies and between
holding company and its wholly owned subsidiary
introduced.
Person / group of persons holding 90% or more
equity shares by virtue of amalgamation etc. Can

purchase the remaining equity shares of the company
from minority shareholders.
Valuation of shares / assets etc. required under 2013
Act to be performed by a Registered Valuer.
Chapter XVI - Prevention of Oppression and Mismanagement
(Sections 241-246)
Yet to be notified Class action by members/depositors by applying to

tribunal.
Chapter XVII - Registered Valuers

(Section 247)
Yet to be notified Lays down the criteria for registration, rights of the
valuer, approach and methods to be used by registered
valuers and contents of the Valuation Report.
Companies Act, 2013 Occasions requiring valuation
1. Section 62- Valuation for Further Issue of Share
Capital
2. Section 192(2) - Valuing Assets involved in
Arrangement of Non-Cash transactions involving
directors
3. Section 230(2)(c)(v)- Valuation of shares,
113
property and assets of the company under
Corporate Debt restructuring scheme.
114
4. Section 230(3) Copy of valuation report to be

accompanied with the notice of the meetings of
shareholders or creditors.
5. Section 232(2)(d) Circulation of report of the
expert relating to valuation at the meeting of
creditors/members.
6. Section 232(3)(h) Exit opportunity to the
shareholders of transferor company in case of

transferor company being a listed company and
the transferee company being an unlisted
company.
7. Section 236(2) Valuation of shares held by
Minority shareholders.
8. Section 260(2)(c)- Valuation of shares/assets for
company administrator.
9. Section 281(1) Valuation of assets for
submission of report by the liquidator.
10. Section 305(2)(d) Valuation at the time of
declaration fo solvency under voluntary winding
up.
11. Section 319(3)(b) - The interest of dissenting
member of transferor company who do not
support the special resolution required by
company liquidator.
Chapter XVIII - Removal of Names of Companies from Register of Companies
(Sections 248-252)
Yet to be notified Removal of name by Registrar of Companies suo motu

or on application by the company.
Grounds on which the registrar may remove the names
of companies has been specified.
Appeal against the order of Registrar companies to
tribunal.
Application by ROC to tribunal against his own action
of inadvertent removal of name. -- --
Chapter XIX - Revival and Rehabilitation of Sick Companies

(Sections 253-269)
Yet to be notified Sickness defined.

Revival and rehabilitation is applicable to all sick
companies.
Time bound rehabilitation process. -- --
Chapter XX - Winding up
(Sections 270-365)
Yet to be notified Winding up process has become time bound.

More grounds of winding up.
Winding up may be by tribunal or voluntary winding up.
Enhanced measures to protect the interest of creditors. -- --
115
116
Chapter XXI - Companies authorized to register under this Act

(Sections 366-378)
Fully notified except -- URC-1 URC 2- Advertisement giving

Sections 372-373 and Application by a company for notice about registration
Section 375-378, proviso to registration under section 366 under Part I of Chapter XXI
Section 370

Chapter XXII - Companies Incorporated outside India
(Sections 379-393)
Fully notified except Service on foreign company by electronic mode. FC-1 FC 5- Nomination by IDR
Section 391(1) Applicability of winding up of provisions to closure of Information to be filed by holder
place of business of foreign company. foreign company
Criminal liability for misstatement in prospectus FC-2
Return of alteration in the
documents filed for registration
by foreign company
FC-3
List of all principal places of
business in India established by
foreign company
FC-4
Annual Return
Chapter XXIII - Government Companies
(Sections 394-395)
Fully notified -- -- --
Chapter XXIV - Registration Offices and Fees

(Sections 396-404)
Fully notified except 399(2) Inspection in electronic form GNL-1

Form for filing an application
with Registrar of Companies
GNL-2
Form for submission of
documents with Registrar of
Companies
GNL-3
Particulars of person(s) or
director(s) or charged or
specified for the purpose of
section 2(60) --
Chapter XXV - Companies to Furnish Information or Statistics
(Sections 405)
117
Fully notified -- -- --
118
Chapter XXVI - Nidhis

(Sections 406)
Fully notified --- NDH 1- Return of statutory

compliances
NDH 2- Application for
extension of time
NDH 3- Half yearly Return

Chapter XXVII - National Company Law Tribunal and Appellate Tribunal
(Sections 407-434)
Only Sections 407-414 have --- -- --

been notified. Other
sections are yet to be
notified.
Chapter XXVIII - Special Courts

(Sections 435-446)
Only Section 439 and Establishment of special courts for speedy trial of -- --
Section 442-446 are notified. offences
Other sections are yet to be Composition of offences by special courts, regional
notified. director and tribunal.
Offences to be non-cognizable with certain exceptions.
Chapter XXIX - Miscellaneous

(Sections 447-470)
Fully notified except Punishment for fraud, false statement, false evidence, ADJ MSC 2- Certificate of status
Section 465-466 punishment where no specific penalty or punishment Memorandum of Appeal of a Dormant Company
is provided, punishment for repeated default etc., MSC-1 MSC 5- Certificate of Status
Adjudication penalties. Application to ROC for obtaining of an Active Company
the status of dormant company
MSC-3
Return of dormant companies
MSC-4
Application for seeking status of
active company
Schedule I-VII
Notified Schedule I- Memorandum and Articles of Association -- --

formats.
Schedule II- Useful lives to compute depreciation.
Schedule III- General instruction for preparation of
balacesheet and statement of profit and losss of a
company.
Schedule IV- Code for independent Directors
Schedule V- conditions to be fulfilled for the appoint-
119
ment of a managing or whole-time director or a
manager without the approval of central government.
120
Schedule VI-Infrastructure projects/ infra-structural

Facilities
Schedule VII- Activities which may be included by
companies in their corporate social responsibility
policies.

Annexure X
NEW FORMS
New form no. Purpose of form Old form
INC-1 Application for reservation of name 1A
INC-2 OPC- Application for Incorporation New form
INC-3 OPC- Nominee consent form New form
INC-4 OPC- Change in Member/Nominee New form
INC-5 OPC- Intimation of cessation New form
INC-6 OPC- Application for Conversion New form
INC-7 Incorporation of Co. (Other than OPC) 1
INC-18 Application to Regional director for conversion

of section 8 co. into any other kind of co. New form
INC-20 Intimation to Registrar of revocation/

surrender of license issued u/s 8 New form
INC.21 Application for commencement of business 19, 20
INC-22 Notice for situation or change of situation

of registered office 18
INC-23 Application to Regional director for approval to 1AD, 24AAA

shift the registered office from one state to
another state or from jurisdiction of one
registrar to another within the state
INC-24 Application for change of name 1B
INC-27 Conversion form Pvt. To public or vice-versa 1B, 62
INC-28 Notice of order of the Court or Tribunal or any

other competent authority 21
PAS-3 Return of allotment 2
121
SH-7 Notice to Registrar for alteration of share capital 5
SH-8 letter of offer New form
SH-11 Return in respect of buy back of securities 4C
CHG-1 Application for registration of creation or

modification of charge (other than debentures) 8
CHG.4 Particulars of satisfaction of charge 17
CHG-6 Notice of appointment or cessation of receiver

or manager 15
CHG-9 Application for registration of creation or

modification of charge in case of debentures 10
MGT-14 Filing of Resolutions and agreements to the

Registrar under section 117 23
DIR-3 Application for allotment of Director

Identification Number DIN1
DIR-11 Intimation of change in particulars of Director

to be given to the Central Government DIN4
DIR-12 Notice of resignation of a director to the

Registrar New form
DIR-8 Particulars of appointment of directors and

the key managerial personnel and the changes
among them 32, 32AD
MR-1 Return of appointment of managing director

or whole time director or manager 25C
MR-2 Form of application to the Central Government 25A

for approval of appointment or reappointment
and remuneration or increase in remuneration
or waiver for excess or over payment to
managing director or whole time director or
manager and commission or remuneration to
directors
URC-1 Application by a company for registration under

section 366 37, 39
FC-1 Information to be filed by foreign company 44
FC-2 Return of alteration in the documents filed

for registration by foreign company 49, 52
FC-3 List of all principal places of business in India

established by foreign company 52
FC-4 Annual Return PTII
ADJ Memorandum of Appeal New form
MSC-1 Application to ROC for obtaining the status

of dormant company New form
MSC-3 Return of dormant companies New form
MSC-4 Application for seeking status of active company New form
GNL-1 Form for filing an application with Registrar

of Companies 61
GNL-2 Form for submission of documents with

Registrar of Companies 62
CG-1 Form for filing application or documents with

Central Government 65
GNL-3 Particulars of person(s) or director(s) or

changed or specified for the purpose of
section 2(60) 1AA
MGT-6 Form of return to be filed with the Registrar 22B
RD-1 Form for filing application to Regional Director 24A
RD-2 Form for filing petitions to Central

Government (Regional Director) 24AAA
Annexure XI
TITLE OF FORMS
II INCORPORATION OF COMPANY AND MATTERS

INCIDENTAL THERETO INC
III PROSPECTUS AND ALLOTMENT OF SECURITIES PAS
IV SHARE CAPITAL AND DEBENTURES SH
V ACCEPTANCE OF DEPOSIT BY COMPANIES DPT
VI CHARGES CHG
VII MANAGEMENT AND ADMINISTRATION MGT
VIII DECLARATION AND PAYMENT OF DIVIDEND DIV
IX ACCOUNTS OF COMPANIES AOC
X AUDIT AND AUDITORS ADT
XI APPOINTMENT AND QUALIFICATIONS OF DIRECTORS DIR
XII MEETINGS OF BOARD AND ITS POWERS MBP
XIII APPOINTMENT AND REMUNERATION OF PERSONNEL MR
XXI COMPANIES AUTHORISED TO REGISTER UNDER

THIS ACT URC
XXII COMPANIES INCORPORATED OUTSIDE INDIA FC
XXIV REGISTRATION OFFICES AND FEES GNL
XXVI NIDHIS NDH
XXVIII SPECIAL COURT -
XXIX MEMORANDUM OF APPEAL ADJ
XXIX MISCELLANEOUS MSC
124
Annexure XII
FORMS BEING CONVERTED INTO E-FORMS
Notice of appointment of auditor by the company ADT-1
Application for removal of auditor(s) from his/their office before

expiry of term ADT-2
Notice of Resignation by the Auditor ADT-3
Application to Central Government for extension of time for filing CHG-8

particulars of registration of creation / modification / satisfaction
of charge OR for rectification of omission or misstatement of any
particular in respect of creation/ modification/ satisfaction of charge
Application for surrender of Director Identification Number DIR-5
Form of application for removal of disqualification of directors DIR-10
Circular or circular in the form of advertisement inviting deposits DPT-1
Return of deposits DPT-3
Statement regarding deposits existing on the commencement of

the Act DPT-4
Application for grant of License under section 8 INC-12
125
Annexure XIII
LIST OF COMPOUNDABLE OFFENCES UNDER THE COMPANIES ACT, 2013
Offences compoundable by Regional Director Offences compoundable by the NCLT Offences compoundable by Special Court
11(2)- Failure of company in complying with the 8(11)- default in complying with the requirements 8(11)- Default in complying with the
requirements relating to commencement of relating to formation of companies with charitable requirements relating to formation of
business. objects etc. companies with charitable objects etc.
16(3)- Default of company in complying with the 40(5)- Default of company in complying with the 26(9)- Contravention of provisions relating
directions issued under sub-section (1) relating to provisions of this section relation to securities to to issue of a prospectus
rectification of name of company be dealt with in stock exchanges
26(9)- Violations of provisions relating to issue of 46(5)- Fraudulently issuing duplicate share 40(5)- default in complying with the
a prospectus certificates by a company provisions of this section relating to securities
to be dealt with in stock exchanges
53(3)- contravention of provisions relating to issue 66(11)- Default in publishing the order of 48(5)- Failure in complying with the provisions
of shares at discount confirmation of the reduction of share capital regarding variation of shareholders rights
by the Tribunal
126
56(6)- Failure of company to comply with the 67(5)- Default in complying with provisions 53(3)- Contravention of provisions relating
provision relating transfer and transmission of relating to purchase by company or loans by to issue of shares at discount
securities under sub-section (1) to (5) company for purchase of its own shares
59(5)- Default in complying with the orders made 74(3)- Failure to repay the deposit or part thereof 59(5)- Failure in complying with the order
by Tribunal relating to rectification of register of or any interest thereon within the time prescribed of Tribunal relating to rectification of register
members or such further time as may be permitted by the of members
Tribunal
64(2)- Default in filing a notice related to altera- 117(2)- Failure in filing with the Registrar the copy 68(11)- If a company makes any default in
tion, increase or redemption of share capital along of notice or agreement within stipulated time complying with the provisions of this section
with the altered memorandum with the Registrar or any regulation made by the Securities
and Exchange Board relating to buy back of
securities
67(5)- Contravention of provisions relating to 124(7)- Default in transfer of amount of accu- 71(11)- default in complying with the order
purchase by company or loans by company for mulated profits to unpaid dividend account and of Tribunal relating to redemption of
purchase of its own shares violating other provisions of section 124 debentures
68(11)- Failure in complying with the provisions 143(15)- Failure of auditor to intimate to Central 74(3)- If a company fails to repay the deposit
of this section or any regulation made by the Government regarding fraud against the or part thereof or any interest thereon
Securities and Exchange Board relating to buy company by officers or employees within the time specified or such further
back of securities time as may be allowed by the Tribunal
86- Violation of any provision relating to Regis- 185(2)- Contravention of the provisions of sub- 86- Contravention of any provision of
tration of Charges (Chapter VI) section 1 relating to loans, guarantee or security Chapter VI relating to registration of
127
Charges
128
88(5)-Failure to maintain register of members/ 245(7)- Committing default in complying with 92(5)- Failure to file annual return before
debenture-holders/ other security holders as the order of Tribunal under this section. the expiry of the period specified under
may be prescribed section 403 with additional fee
89(5)-Failure to file declaration not holding 314(8)- Default in complying with the provisions 128(6)- Failure to keep proper books of
beneficial interest in any share of this Section except sub-section (5). account
89(7)-Failure to file return relating to beneficial 316(2) -Failure to send quarterly report on 129(7)- Failure to keep proper financial
interest in any share before the expiry of the time winding up and call meeting by company statement
specified u/s 403(1)(i) proviso liquidator

92(6)- If a company secretary in practice certifies 134(8)- Default in complying with the
the annual return not in conformity with the provisions regarding financial statement
requirements of this section or the rules made and Boards report
there under
99-Default in holding a meeting of the company 137(3)- Failure to file financial statements
as u/s 96 /97 /98 or in complying with any with the Registrar
directions made by the Tribunal
102(5)- Default in complying with the provisions 147(1)- Failure of company to comply with
of this section relating to statement to be the provisions of sections 139 to 146 with
attached to the notice regard to auditors
105(3)- If default is made in complying with sub- 159- Contravention of the provisions u/s
section (2) pertaining to proxies 152, 155 and 156
105(5)- If invitations to appoint as proxy a person 167(2)- Functioning as a director after

or one of a number of persons specified in the vacation of office
invitations are issued
121(3)-Failure to file Report on annual 178(8)- Default in complying with the

General meeting. provisions u/s 177 & of this section relating
to Committees like Nomination, Remune-
ration and Stakeholders Relationship
committee
124(7)- Failure to transfer the amount of accu- 184(4)- Failure to disclose directors
mulated profits to unpaid dividend account and interest and Participation in Board meeting
violating other provisions of section 124 by interested director
137(3)-Failure to file financial statements with the 185(2)- Contravention of the provisions of
Registrar sub-section (1) relating to loans, guarantee
or security
140(3)-Non-Compliance by auditor of sub- 187(4)- Contravention of the provisions of

section (2) relating to filing of resignation this section relating investment of company
information held in its name
147(1)-Failure of company to comply with 188(5)(i)- Contravention of this section

provisions of sections 139 to 146 with regard to relating to Related party transaction in
auditors case of listed Company
129
130
157(2)-Failure to furnish DIN to Registrar 194(2)- Forward dealing in Securities of the

company by Key Managerial personnel or
director
165(6)- Acting as a director of more than 20 195(2)- Contravention of this section (195)
companies relating to Insider trading of securities by
Key Managerial personnel or director
166(7)- Default in complying with the provisions 221(2)- Any removal, transfer or disposal

of this section relating to directors duties of funds, assets, or properties of the
company in contravention of the order of
the Tribunal under sub-section (1)
172- Contravention of the provisions of Chapter 222(2)- Securities in any company are issued
XI relating to appointment and qualifications of or transferred or acted upon in contraven-
directors tion of an order of the Tribunal under sub-
section (1)
178(8)- Default in complying with the provisions 232(8)- Contravention of the provisions by
of section 177 & of this section relating to the transferor and transferee company in
Committees like Nomination, Remuneration and case of merger or amalgamation
Stakeholders Relationship Committee
188(5)(ii)- Related party transaction in case of 242(8)- Contravention of the order of

other company Tribunal relating to alterations in
memorandum or articles
186(13)- Contravention of the provisions of this 243(2)- Acting as managing or other

section relating to loans and investment director or manager, whose agreement has
been terminated or set aside
187(4)- Contravention of the provisions of this 274(4)- Failure to file statement of affairs
section relating to investment of company held in
its name
191(5)- Contravention of the provisions of this 284(2)- Failure to extend full cooperation
section relating to payment to director for loss of to the company liquidator
office in connection with transfer of property
197(15)- Contravention of the provisions of this 305(4)- Without reasonable grounds giving
section relating to managerial remuneration in declaration of solvency in case of proposal
case of absence or inadequacy of profits. to wind up voluntarily
203(5)- Contravention of the provisions of this 306(5)- Default in calling the meeting of
section relating to appointment of Key the creditors; to prepare a statement of the
Managerial personnel position of the companys affairs alongwith
a list of creditors, estimated amount of claim
and filing the resolution with Registrar
204(4)- Contravention of the provisions of this 347(4)- contravention of any rule framed
section relating to Secretarial Audit for bigger or an order made under sub-section (3)
companies.
206(7)- Failure to furnish any information during 348(7)- Wilful default by company
131
inspection or inquiry liquidator
132
221(2)- Any removal, transfer or disposal of funds, 392- Contravention of the provisions of
assets, or properties of the company in violation Chapter XXII by a foreign company
of the order of the Tribunal under sub-section (1)
222(2)- Securities in any company are issued/ 405(4)- Failure to furnish information or
transferred/acted upon in violation of an order of statistics etc. by the companies required by
the Tribunal under sub-section (1) the Central Government
232(8)- Contravention of the provisions by the 441(5)- Failure to comply with the order
transfer and transferee company in case of made by Tribunal or Regional Director in
merger or amalgamation relation to Compounding of offences

238(3)-Failure to register the offer of Schemes 454(8)- Failure to pay the penalty imposed
involving transfer of shares. by the adjudicating officer or Regional
Director
242(8)- Contravention of the order of Tribunal
relating to alterations in memorandum or articles
247(3)(Proviso)- Contravention of the provisions of

this section by the valuer
249(2)- Filing of application in restricted cases for

removal of name
302(4)- default by official liquidator in forwarding

a copy of the order of dissolution of company by
tribunal within the period specified in sub-section
(3)
306(5)- Default in calling the meeting of the

creditors; to prepare a statement of the position of
the companys affairs along with a list of creditors,
estimated amount of claim and filing the resolution
with Registrar
307(2)- Default in publication of resolution to wind

up voluntarily
312(2)- Failure to give notice of appointment of

Company Liquidator to Registrar
314(5)-Failure to prepare quarterly statement of

accounts by company liquidator in voluntary winding
up and file with the Registrar under sub-section (5).
318(8)- Failure to comply with the provisions of this

section relating to final meeting and dissolution of
company
342(6)- Failure or neglect to give assistance required

under sub-section (5)
344(2)- Failure to give statement that the company

is in liquidation
348(6)- Contravention of the provisions of
133
information as to pending liquidation
134
356(2)- Failure to file certified copy of the order of
Tribunal relating to dissolution of company void with
the Registrar
392- Contravention of the provisions of Chapter

XXII by a foreign company
405(4)- Failure to furnish information or statistics

etc. by the companies required by the Central
Government

450- No specific penalty or punishment is provided
in the Act
451- Repeated default within 3 years
452(1)- Punishment for wrongful withholding of

property
453- Improper use of the words limited and

private limited
454(8)- Failure to pay the penalty imposed by the

adjudicating officer or Regional Director
464(3)- Being a member of a company formed

exceeding certain numbers
469(3)- Contravention of the Rules framed by

Central Government
Annexure XIV
PENALTIES
Section No Particulars Responsibility Penalty on non-compliance Persons liable

7 Incorporation of Ensure true and correct information a) Imprisonment - six months to ten First directors, promoters,
Company is submitted and no material infor- years and persons connected with
mation is suppressed at the time of b) Fine 100% to 300% of the amount incorporation
incorporation of company involved in the fraud
42 Contravention of Ensure compliance with the Amount involved in the offer or invitation Company, its promoters and
provisions of provisions relating to offer or or two crore rupees, whichever is higher. directors
private placement acceptance of monies under
private placement
100 Conduct of Ensure extraordinary general Reimbursement of reasonable expenses Directors who were in default
extraordinary meeting is conducted as per the incurred in calling the meeting to the in calling the meeting
general meeting provisions on the request of the requisitionists
members
102 Statement to be Ensure appropriate disclosure in Fine - fifty thousand rupees or five Promoter, director, manager or
annexed to notice the statement annexed to times the amount of benefit derived other key managerial
of general meeting. notice of annual general meeting. whichever is more personnel
135
136
In case any benefit accrues on

account of non-disclosure or
insufficient disclosure,
compensate the company to the
extent of benefit received
127 Distribution of Ensure dividend/warrant in Company interest @18% per annum Company, every director of the
dividends respect thereof is paid within for the period of default company if he is knowingly a
30 days from the date of Director: Imprisonment - upto two party to default
declaration years; or

Fine upto one thousand per rupees per
day of default;
or with both imprisonment and fine
128 Books of accounts Ensure the books of accounts Imprisonment - upto one year; or MD, the WTD in charge of
and other relevant books, papers Fine - fifty thousand rupees to five lakh finance, the CFO or any other
and financial statement, for rupees; or person responsible
every financial year for the with both imprisonment and fine
company has been prepared and
kept at its registered office
129 Financial Ensure provisions relating to Imprisonment - upto one year; or MD, the WTD in charge of
statement preparation of financial state- Fine - fifty thousand rupees to five lakh finance, the CFO or such other
ment has been complied with rupees; or responsible person
with both imprisonment and fine
137 Copies of Ensure financial statements Company - fine of one thousand rupees Company, MD and CFO, if any
financials state- along with the relevant attach- for every day of default but not and if not, then any director
ments to be filed ments has been filed with the exceeding ten lakh rupees responsible and in the absence
with the registrar registrar within the time Persons: Imprisonment - of any such director, all such
specified under section 403 upto six months; or directors
Fine - one lakh rupees to five lakh rupees;
or with both imprisonment and fine
152, 155 Appointment of Ensure compliance with the Imprisonment - upto six months; or Any individual or director
& 156 directors provisions relating to appoint- Fine upto fifty thousand rupees and fine
ment, retirement and furnishing of five hundred rupees for every day of
of director identification number continuing default
to the company etc
165 Number of Ensure compliance with Fine - five thousand rupees to twenty-five Any person proposed to be
directorships provisions relating to number of thousand rupees for every day of appointed as director
directorship in a company continuing default
(max - 20, subject to director-
ship in the public company,
including a company which is a
subsidiary of a public company,
shall not exceed 10)
166 Duties of Act in accordance with the Fine - one lakh rupees to five lakh rupees Director
directors articles of association and
according to provisions
mentioned in section 166
167 Vacation of office Vacate the office of director on Imprisonment - upto one year or Director
of the director account of disqualification as Fine - one lakh rupees to five lakh
specified in subsection (1) rupees, or
137
section 167 with both imprisonment and fine
138
184 Disclosure of Make appropriate disclosure of Imprisonment upto one year; or Director
director's interest director's interest in other Fine - fifty thousand rupees to one lakh
companies, firms, association of rupees; or
persons etc. with both imprisonment and fine
185 Loans to directors Ensure compliance with Company - Fine - five lakh rupees to Company and director
section 185(1) relating to twenty-five lakh rupees
advancement of loan to director Director - imprisonment upto six months;
or providing guarantee/security or
to director Fine - five lakh rupees to twenty-five lakh

rupees; or with both imprisonment
and fine
189 Register of Ensure maintenance of register Fine - twenty-five thousand rupees Director
contracts in of contracts and arrangements
which directors entered into with the interested
are interested directors and related parties
191 Payment to Ensure compliance with Fine -twenty-five thousand rupees to Director
director for loss provisions relating to payment to one lakh rupees
of office directors for loss of office in
connection with the transfer of
undertaking, property or shares
194 Forward dealing Not to engage in forward Imprisonment upto two years; or Director or KMP
in securities by dealings in the securities of the Fine - one lakh rupees to five lakh rupees;
KMP company or in its holding, or
subsidiary or associate company with both fine and imprisonment
203 Appointment of Ensure compliance with Company - one lakh rupees to five lakh Company, every director and
KMP provisions of section 203 for rupees and every KMP, who is in default
appointment of whole-time Director - fine upto fifty thousand rupees
KMP and one thousand rupees for every day
of continuing default
238 Dissenting share Register the circular/scheme Fine - twenty-five thousand rupees to Director in default
holders in a for acquisition of shares from five lakh rupees.
scheme of merger dissenting shareholders in a
scheme of merger
243 Oppression and Not to act as MD, director or Imprisonment up to six months; or Any person who knowingly
mismanagement manager of the company for a Fine - may extend to five lakh rupees; or acts as a MD or other director
period of five years if the with both fine and imprisonment or manager of a company &
contract between the company every other director of the
and such managing director, company who is knowingly a
director or manager, as the case party
may be, has been terminated or
set aside
139

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Companies Act, 2013

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THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

The 8th of August, 2013 would be remembered as a historic day in the

I am grateful to CS K Sethuraman, Group Company Secretary, Reliance

New Delhi CS R. Sridharan

Control [Section 2(27)]

(a) Balance sheet as at the end of the financial year.

(b) Profit and loss account / income and expenditure account.

(c) Cash flow statement.

(d) A statement of changes in equity (if applicable).

Financial Year [Section 2(41)]

Every company or body corporate to have financial year ended

(a) The CEO or Managing Director or Manager

(b) Whole-time Director

(c) Chief Financial Officer

(d) Company Secretary

The CEO and Manager need not be a member of the Board.

Listed Company [Section 2(52)]

A listed company means a company (public or private) which has any

One Person Company (OPC) has been defined to mean a private

The memorandum of OPC shall indicate the name of the person

No person shall be eligible to incorporate more than one OPC or

resolution is entered in the minutes book and signed and dated by

The provisions of Section 98 and Sections 100 to 111 (both

INCORPORATION OF COMPANY AND MATTERS

Memorandum and Articles of Association

The articles of a company may contain provisions for entrenchment,

The provisions for entrenchment in the articles can be made at

Various documents and information are required to be submitted

Where any person furnishes any false or incorrect particulars of

Where at any time after the incorporation of a company, it is

PROSPECTUS AND ALLOTMENT OF SECURITIES

Modes of raising Resources by Companies

Variation in terms of contract or objects in prospectus (Section 27)

Existing members of a company (including a listed company), may

any other action may be taken by any person, group of persons

(a) Provisions are common to all class of companies private,

(b) Listed companies will be governed by SEBI (ICDR) Regulations,

(c) Prior approval of shareholders by passing a special resolution

(e) Even an agreement to allot securities to more than the

(f) No offer or invitation of another kind of security shall be made

(h) The payment for subscription to securities shall be made from

SHARE CAPITAL AND DEBENTURES

Kinds of Share Capital (Section 43)

Alteration of Share Capital

in such cases shall be determined by a registered valuer except in

ACCEPTANCE OF DEPOSITS BY COMPANIES

No company shall invite, accept or renew deposits from the public

No government company can accept deposits in excess of

Major conditions for acceptance of Deposits

Period : Deposits not repayable in less than six months or

Rate of interest and brokerage : Not exceeding a rate maximum

General : In case of adverse change in credit rating, depositors

Which are not exempted deposits? (Important Items)

Application money or advance money received for subscription

Amount received from a member by a private company is not

Every company creating or modifying a charge should register the

MANAGEMENT AND ADMINISTRATION

Register of Members etc. (Section 88)

Nature of concern or interest, financial or otherwise of every

DECLARATION AND PAYMENT OF DIVIDEND

Dividend can be declared out of profits after providing for

Monies transferred to the Unpaid Dividend Account remaining